National Funding Small Business Loans: 2021 Review

Kelsey SheehyOct 14, 2021

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National Funding has been financing small businesses since 1999 and has originated more than $3 billion in loans. The alternative lender provides fast short-term business loans, merchant cash advances, and equipment financing and leasing to businesses. But National Funding’s business loans typically require daily repayment and carry high borrowing costs.

National Funding small-business loans may be a good fit if you:

  • Need cash fast: Borrowers may receive a decision and funding within 24 hours.

  • Have bad credit: National Funding may approve new applicants with FICO scores as low as 500 (475 for loan renewals).

  • Can repay your loan early: Equipment financing customers receive a 6% discount on the remaining balance when they pay off the loan early. Borrowers with a working capital loan receive a 7% discount on the remaining balance if the loan is paid in full within the first 100 days.

Pros and cons

Pros

  • Fast funding.

  • Prepayment discount.

  • Offers funding to business owners with bad credit.

  • Serves a wide range of industries.

Cons

  • High borrowing costs.

  • Short-term loans require daily or weekly repayment.

Short-term business loan

Loan amount: $5,000 to $500,000.

Loan term: Four months to two years; daily or weekly repayment.

How to qualify:

  • 500+ minimum credit score.

  • $150,000+ in annual revenue.

Equipment financing

Loan amount: Up to $150,000.

Loan term: Two to five years; monthly repayment.

How to qualify:

  • At least six months in business.

  • 575 minimum credit score.

  • Equipment quote from a vendor.

Merchant cash advance

How to qualify:

  • At least one year in business.

  • $3,000+ in monthly credit card transactions.

  • Last four months of credit card statements.

Reasons to use National Funding

Quick application, funding

National Funding’s loan application is relatively painless. Business owners can apply online in a matter of minutes and get a decision within 24 hours, and approved loans may be funded as soon as the next business day. A business loan from a traditional bank takes days or even weeks to get from application to funds in the bank.

Easier for businesses to qualify

Small-business owners typically need a credit score of 690 or higher to qualify for an SBA loan or to secure a loan through a traditional bank. National Funding offers business loans to borrowers with bad credit (a FICO score as low as 500).

Early repayment discount

National Funding borrowers who repay their equipment loan early get a 6% discount on the remaining balance. On working capital loans, borrowers earn a 7% discount on the remaining balance if they pay their loan in full within the first 100 days.

Where National Funding falls short

Daily or weekly repayments

National Funding’s short-term loans require daily or weekly payments. That can put a strain on businesses with irregular sales or cash reserves that are already stretched thin.

High borrowing costs

Borrowing costs for National Funding loans range from 15% to 30% of the loan amount, with an average borrowing cost of 26%, according to the company. The lender’s borrowing costs include a 1% origination fee.

Here’s how that breaks down: A $100,000 loan costs borrowers $26,000 on average. If the loan is repaid seven days a week over a seven-month repayment term, you’d pay about $600 daily. The APR on the loan would exceed 80%.

Compare business loans

If you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.