Credibility Capital, a New York-based online lender founded in 2013, offers low-risk borrowers access to short-term business loans. The company also offers competitive annual percentage rates between 10% and 25%, making it attractive to high-credit borrowers who may fall just short of qualifying for financing at traditional banks. To date, the company has provided about 300 loans totaling more than $20 million.
Credibility Capital connects with potential clients through partnerships with organizations like Dun & Bradstreet, which helps businesses build and monitor business credit.
Popular with service-based industries — think restaurants and financial services, like accounting — the company provides borrowers with term loans from $10,000 to $350,000, with one-, two- or three-year term options. Brett Baris, Credibility Capital CEO and co-founder, says that the average loan size falls right around $75,000 and that businesses typically use the money for expansion and refinancing loans with higher APRs.
Reasons to use Credibility Capital
Underwriting flexibility: Credibility Capital takes a holistic view of a business’s finances, meaning it doesn’t always execute hard cutoffs for certain business metrics, Baris says. If a company shows strong performance in a specific area, for instance, that may compensate for low credit score or revenue.
No prepayment fee: If you take out a term loan but find yourself financially stable sooner than you thought, you can pay off the loan faster without incurring additional fees. Paying your loan back early can help cut down on how much you pay in interest, lowering the overall cost of borrowing.
Automatic monthly payments: Each month, you’ll pay a portion of the loan via an ACH transfer. The loan is fully amortizing, meaning each payment will consist of interest and principal. This ensures the loan will be paid off at the end of the loan term.
Where Credibility Capital falls short
Not for bad-credit borrowers: While Credibility Capital doesn’t have an official minimum credit requirement, typical borrowers have at least a 650 personal credit score. That places them squarely in the prime lender range. Borrowers also can’t have had a personal or commercial bankruptcy within the past five years. When evaluating the strength of a business, Credibility Capital looks at commercial credit bureaus, business credit score, financial statements, tax returns and bank statements along with the FICO score and credit report of the proprietor. “Our underwriting is, in a sense, a little more traditional than some other folks in our industry,” Baris says.
Not for long-term financing: Term loans max out at three years, so if you’re looking for financing you can use in the near and distant future, you’re better off looking into long-term financing from SmartBiz, for instance, which provides Small Business Administration loans.
Requires a UCC-1 filing and possibly a personal guarantee: Credibility Capital loans are secured by a UCC-1 filing, which essentially means you’re putting up your business as collateral. Though the company doesn’t place a lien on a specific item (real estate, equipment, etc.), the filing means it has a stake in your assets.
Additionally, if you own 25% or more of your business, you will also need a personal guarantee for the loan. In this case, your personal assets could be at risk.
Compare Credibility Capital with other lenders
If you want to compare Credibility Capital with other lenders, use NerdWallet’s small-business loan tool. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Jackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @jackie_zm.