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Updated on Thursday, April 25, 2019
Kapitus, formerly known as Strategic Funding Source, was founded in 2006. The company announced in January 2019 that it would rebrand as Kapitus, combining its funding and loan servicing departments. The lender has provided more than $2 billion to more than 40,000 U.S. businesses.
It helps business owners cover daily expenses such as payroll, repairs and taxes, as well as larger purchases like expansions, renovations and equipment upgrades. If you’re considering alternative business financing to cover your expenses, continue reading to find out if Kapitus could offer the right solution for your business needs.
Kapitus financing details
Kapitus advertises several financing options for small business owners, including traditional loans and cash-based financing. Many specifics about the products are not available on Kapitus’ website, so hopefully you can use this review to help you compare it to your other options.
The company offers short-term and long-term loans to business owners with good credit, stable revenue and a solid business plan. The average business loan is for $55,000 with a 12-month repayment term, according to a representative from Kapitus, though terms could be based on your business’ cash flow. The company uses factor rates to determine interest. A factor rate is written as a decimal figure, so you would multiply the amount of your loan by the factor rate to calculate the total cost that you would owe. Kapitus’ average factor rate is 1.24, according to a representative. So if you took out a $55,000 loan with a 1.24 factor rate, you would pay $68,200 total. You can also pay back the loan early without a prepayment penalty.
Helix health care financing
Kapitus offers financing to independent health care practices through a partnership with Bankers Healthcare Group. You can apply for between $20,000 and $500,000 in funding, which you could receive in as little as three days. No collateral is required for the financing, which comes with repayment terms of 6 months to 120 months. Those payments can be made daily, weekly or monthly.
The company helps business owners finance up to 100% of eligible equipment purchases with no down payment required. It also offers equipment leases that allow you to continuously upgrade equipment to keep costs down while using new machinery. The average funding amount for equipment financing is $80,000 with a 48-months repayment term, according to a representative, while the average APR is 7.5%.
Line of credit
A line of credit from Kapitus gives business owners almost instant access to funding. The maximum you can borrow through a line of credit is $500,000, according to a representative. Repayment terms average 12 months, although terms and rates would depend on your risk as a borrower. A line of credit could be a good option if you have less-than-perfect credit and need continuous cash.
Kapitus’ revenue-based financing is a merchant cash advance, which allows you to borrow money against your future earnings. You could receive a sum of cash and make payments based on a fixed percentage of sales that Kapitus would take out of your bank account or credit card transactions. The average amount of Kapitus’ revenue-based financing is $55,000 with a 12-month term, according to a representative. The average factor rate is 1.24, which is the same with business loans. Kapitus could approve your application for revenue-based financing in a day and make cash available within a week. Approval would be based on your time in business and revenue history, and you would not need to offer assets as collateral.
Invoice factoring allows business owners to borrow money based on outstanding invoices. You would sell your invoices in exchange for cash. Kapitus would then collect payments from your clients and pay itself a fee. The remainder of the payment would then go to your business bank account. Invoice factoring is available up to $2,000,000, according to a representative, and terms and rates would be dependent on your specific invoices. The application and underwriting process could take five to 10 days, and you could see funds in one to two days after approval. Kapitus uses factor rates to communicate the cost of invoice factoring as well, though the lender does not disclose average rates.
Purchase order financing
Purchase order financing helps business owners pay their suppliers when cash flow problems arise. You may be able to cover 100% of all supplier costs if your gross margin for an order is more than 25%. Purchase order financing would let you fill larger orders and continue expanding your customer base.
What businesses are eligible for Kapitus financing?
The minimum requirements to be eligible for Kapitus financing are somewhat more lenient than other business lenders’ requirements. Kapitus asks for at least six months in business and $100,000 in annual revenue. You would need a personal credit score of at least 600 to qualify for a business loan or equipment financing, and a score of at least 550 for a line of credit or revenue-based financing, according to a representative.
Businesses in the health care industry may be best suited for Kapitus since funding can be available in as little as three days for its Helix health care financing. Kapitus takes into account factors such as delayed insurance payouts and low insurance premiums.
The pros and cons of Kapitus
- Variety of financing options
- Lenient eligibility requirements
- Fast approval decisions for health care financing, invoice factoring and revenue-based financing
- Limited information online
- Several documents needed to apply (more on this below)
- No same-day financing available
Application process and requirements
Kapitus’ application process is done online. You start with an online form, then sign and submit a PDF version of the application. The application calls for basic information about your business, as well as your FICO Score and information about any funding that you have from another lender.
When applying for a business loan or line of credit, you would need to submit your three most recent bank statements, last year’s tax statements and three business references with contact information. Helix health care financing requires the same information. You may need to submit additional documents as you go through the loan underwriting process.
An equipment financing application would require a quote or estimate of the equipment you plan to obtain, as well as your business and personal financial statements and tax returns. The paperwork you need would depends on whether you want to lease your equipment or purchase it with the help of financing.
Invoice factoring requires applicants to submit accounts receivable and accounts payable reports, articles of incorporation or a partnership agreement, personal or corporate tax returns, and a personal or corporate financial statement. Your commercial clients’ credit must also be in good standing.
An application for purchase order financing asks for three months’ worth of bank statement, last year’s tax returns and your final purchase order. The creditworthiness of your commercial clients would be a deciding factor as well.
The fine print
Few details available online. Kapitus provides descriptions of its individual loan products online, but little to no information about funding amounts, interest rates, terms and fees. You would likely need to submit an application to find out how much you can borrow and what it will cost. Though we talked to a representative to get more details, the lack of information may make it more difficult to compare it to other online lenders when shopping for business financing.
Beware cash advances. Kapitus’ revenue-based financing functions as a merchant cash advance, which is a risky form of business financing. A merchant cash advance provider would purchase a portion of your future receivables, such as credit card sales, in exchange for a lump sum of money. The cash advance provider takes a portion of your daily credit card sales or makes withdrawals from your bank account until the advance is paid back. This form of repayment can have a major impact on your cash flow. Although it is one of Kapitus’ fastest financing options, consider the risks before taking on a cash advance.
The bottom line
Kapitus has been in the alternative business lending space for more than 10 years. In that time, Kapitus has developed several funding programs for business owners, allowing you to find the right financing for your situation.
You could obtain a term loan for small or large costs, a line of credit to cover ongoing expenses or an advance to borrow against your receivables. If you need equipment, Kapitus gives you the choice to lease or buy new assets.
But Kapitus discloses very few details online. You wouldn’t be able to find out how much you could borrow or the cost of various products without submitting an application or speaking to customer service — though we contacted Kapitus to try to provide as much detail as possible. You could submit an application online, though the type of financing you’re seeking would determine which additional documents Kapitus needs.
If you want to explore options for covering business costs, Kapitus could offer you a range of options. But before signing an agreement, make sure you understand the cost and the repayment terms associated with your funding. Be sure to compare various lenders before making your decision. Consider comparing options with MagnifyMoney’s parent company, LendingTree. You simply fill out a short form and can receive up to five business loan offers from lenders, based on your creditworthiness.