Credibility Capital Small-Business Loans: 2020 Review

Credibility Capital, a New York-based online lender founded in 2013, offers low-risk borrowers access to short-term business loans.

Credibility Capital is a good fit for:

• Strong credit borrowers: It's attractive to good-credit borrowers who may fall just short of qualifying for traditional financing.

• Small businesses looking for growth opportunities: According to Brett Baris, Credibility Capital CEO and co-founder, average loan size was around $175,000 in 2019, and businesses typically use the money for expansion and refinancing high 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.

» MORE: Compare low-interest business loans

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 680 personal credit score. Borrowers also can’t have had a personal or commercial bankruptcy within the past five years. “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.

» MORE: Find options for short-term business 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.

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