Credibly is a direct lender of working capital loans and merchant cash advances, offering working capital loans, business lines of credit, equipment financing, and more. They promise fast, flexible loans, excellent customer service. Their biggest selling point is that you may qualify for a loan even if you’ve been in business for as little as 6 months and your credit score is as low as 500.
But is Credibly … credible?
We took a deep dive into the company to see if it’s a viable option for businesses like yours. In this post, we’ll summarize the credit products available from Credibly and share our other findings so you can decide if a loan from Credibly is a smart move for your business.
Here’s what we’re going to cover:
Table of Contents
- Credibly Review
- What is Credibly?
- Who and where is Credibly?
- How does Credibly work?
- What types of funding can you get from Credibly?
- Working Capital Loans
- Business Expansion Loan
- Small Business Line of Credit
- SBA Loans
- Merchant Cash Advance
- Equipment Financing
- Invoice Factoring
- What Do People Have to Say about Credibly?
- Final Thoughts
Promising a “manic” focus on customer experience, Credibly provides short- and long-term financing to thousands of businesses around the United States. Rather than sticking with the standard criteria of time in business and credit score, they use an innovative technology platform to analyze a business’s total health in order to determine its eligibility for a loan.
This is good news if your business is young or if your personal credit score leaves something to be desired. However, that convenience comes with higher costs and more stringent repayment terms than you’d usually get from a traditional bank loan.
Credibly was founded in 2010 as RetailCapital LLC by Ryan Rosett and Edan King with a focus on providing affordable credit to small and mid-sized businesses. In 2015, it rebranded and now does business under the Credibly name. The company is based in Minnesota.
You start the application process from Credibly’s website by entering some basic information about your business, along with your contact information. Assuming you prequalify, you’ll be contacted by a Credibly representative to go over your loan options, determine how much money you need, and what documentation you’ll have to provide.
In most cases, documentation will include:
- Business lease agreement or business mortgage statement
- Picture ID of all owners
- Most recent business tax return (if you are applying for a loan above $100,000)
- Bank statements for the last three months
- Basic personal information, such as your social security number
Credibly promises application review within one business day and funding delivered straight to your bank account, meaning that you could get your funding in less than a week.
Credibly offers a variety of credit products. I’ll go into the costs of each individual loan type in the summaries below.
One important thing to keep in mind is that all Credibly business loans require a personal guaranty by the majority principal(s) of the business. That means you, the individual, are personally responsible for the loan in the event that your business defaults.
Here’s a nutshell look at the financing types, terms, and costs (I explain more about factor rates below):
Many new businesses or startups struggle with cash flow and maintaining adequate working capital. Working Capital loans are short-term loans ranging from $5,000 to $400,000 designed to cover the everyday expenses of running a business, such as payroll, marketing, purchasing inventory, and day-to-day operational needs. (Find out more about working capital here.) These short-term loans can help stabilize cash flow and meet immediate business needs.
At 6 to 18 months, Credibly’s Working capital loans repayment terms are relatively short. The good news is that they’re flexible and fast. Qualifying criteria include:
- You’ve been in business for at least 6 months
- You have a personal credit score of 500 or higher
- You have at least $15,000 in average monthly bank deposits
The downside is that these advantages come at the cost of shorter repayment terms and higher costs. Credibly also requires a UCC-1 blanket lien, meaning that Credibly has the right to seize all pledged assets owned by a debtor in the event of a default. Repayments are made in the form of automatic withdrawals from your account on either a daily or weekly basis.
Unlike longer-term loans, the working capital loan doesn’t accrue interest. Instead, there’s a fixed “borrowing fee,” known as a factor rate, starting at 1.15. (To figure out the cost of your loan, multiply the amount of the loan by the factor rate.) Unlike an interest-bearing loan, factor rates prevent borrowers from making additional principal payments to save money on interest. You’ll also need to pay a one-time origination fee of 2.5% of the total loan amount, which will be deducted from your proceeds.
Credibly’s Business Expansion Loan provides larger-scale growth capital at longer repayment terms than the Working Capital Loan. It’s designed for business owners with a proven track record of success and financial security who are looking to make capital investments in their companies. If you’re thinking about opening a new location, purchasing new equipment, expanding your team, or launching a new product, a business expansion loan might be what you need to take your business to the next level.
The Business Expansion Loan is a more traditional option than the Working Capital Loan. Like a regular bank loan, Business Expansion Loans accrue interest, which ranges from 9.99% to 36%. Your rate will depend on Credibly’s assessment of your business’s overall health. As with the Working Capital Loan, there is a 2.5% origination fee. Repayments are made weekly.
A 2.5% origination fee is okay, though you could probably find lower fees. And while 9.99% for the Business Expansion Loan isn’t bad, 36% is definitely on the high side.
Requirements for a Business Expansion Loan are more stringent than for a Working Capital loan. Qualifying criteria include:
- You’ve been in business for at least 3 years
- You have a personal credit score of 600 or higher
- You have business revenue of at least $15,000/month, with an average daily balance of at least $3000
Credibly will almost certainly be faster than a bank loan, letting you take advantage of opportunities when they arise. On the other hand, the fixed weekly payments might be difficult for businesses with fluctuating revenue, and a business expansion loan from them will almost certainly be more expensive than a traditional bank loan.
A business line of credit is similar to a credit card. It allows you to borrow up to a certain amount, or credit limit, as you need it. After you pay off what you’ve used, the full line of credit is available for you to use again, giving you access to funds when you need them without having to pay for what you don’t use. Typically, the interest rate will be lower than a standard credit card, however. (Learn about the ins and outs of business credit.)
Unlike a credit card, however, business lines of credit typically have lower interest rates and do not have mandatory monthly payments.
Credibly provides access to both secured and unsecured business lines of credit with a maximum credit limit of $250,000.
Minimum criteria for a Business Line of Credit from Credibly:
- 560+ personal credit score
- 6+ months in business – located in the United States
- $50,000+ in annual revenue
Interest rates and funding amounts begin at 4.8% and are based on a review of your business, personal FICO score, and other factors. An origination fee may be required.
The Small Business Administration (SBA) helps small businesses get funding by partially guaranteeing loans made by private lenders (Learn more about Small Business Loans here). They’re typically more difficult to qualify for but offer low rates and more favorable terms than other loans. Credibly is able to provide access to SBA loans for working capital, debt refinancing, and equipment purchases.
- 620+ personal credit score
- 2+ years in business
- The business owner must be a U.S. citizen or legal permanent resident
- Must not have outstanding tax liens
- No bankruptcies or foreclosures in the last 3 years
A Merchant Cash Advance (MCA) is a lump sum of funding is given to a business in exchange for an agreed-upon percentage of future revenues or credit card sales. It’s not a loan; rather, you’re selling a percentage of your future sales for cash upfront.
Generally, I don’t recommend merchant cash advances as they tend to be much more expensive than other financing options (you can read some of my thoughts on alternative financing here). Credibly’s factor rate for a Merchant Cash advance starts at 1.15, in addition to a 2.5% origination fee, and a monthly “administration fee” of $50.
- 500+ credit score
- 6+ months in business
- $15,000+ average monthly bank deposits
If you need to buy or lease specific equipment for your business, equipment financing allows you to obtain the equipment you need now and pay for the asset over its lifetime. Examples include healthcare equipment, construction equipment, vehicles, kitchen equipment, and other large hard asset purchases that allow you to increase production and grow your business.
Unlike its other products, Credibly doesn’t state the terms, rates, or minimum qualifications for its Equipment Financing on its website.
Invoice or accounts receivable factoring lets your business sell its invoices to a factoring company at a discount in exchange for upfront funding. The factor company then advances you up to 95% of the invoice amount, collects the money from the client, and sends any remaining balance to you, minus a fee.
This can help you maintain a positive cash flow when dealing with slow-paying clients. However, the overall costs may be higher than a traditional loan, and access will depend in part on your client’s creditworthiness.
At the time of writing, Credibly has 889 reviews on Trustpilot, 91% of which are either 4 or 5 stars. So far, so good. However, the 50+ one-star reviews are pretty damning. Many of the complaints claim that Credibly mishandled requests for PPP funding. Others complain of misleading information about fees, lack of communication, and poor customer service.
Lending Tree has 20 reviews, all of which are 4 or 5 stars. The Better Business Bureau, on the other hand, gives Credibly an A+ rating, but feedback consists solely of one-star reviews.
Of course, it’s human nature to share the bad news and be less interested in sharing a positive or even neutral experience. Furthermore, 2020 and the PPP loan situation was unprecedented, and Credibly certainly wasn’t the only company that had trouble keeping up.
I recommend reading both the good and bad reviews as part of your due diligence. Even more importantly, as with any loan agreement, you should read the fine print carefully and ask questions about anything you don’t understand. It’s clear from reading the reviews that many customers didn’t
fully understand the terms they’d committed to.
On average, Credibly loans will cost more than traditional loans, so understand what you’re getting into before you sign and make sure the extra cost is worth it to you.
Credibly’s rates, including interest, factor rates, origination fees, and an admin fee in the case of merchant cash advances are on the high side. If your business is young, you don’t have great credit, and you have at least $15,000 in revenue per month, Credibly could be a viable way to get the funding you need to stay in business or expand. It’s a relatively young company, but it’s legitimate, and it has enough happy customers that it’s obviously doing something right.
That said, I can’t really recommend loans through them unless your business is really on the ropes, and if it is, the personal guaranty could be really dangerous. Before committing to Credibly or any other company, you should shop around carefully for quotes. You can probably get comparable loans for less money, especially if you’re more established and/or have a solid credit score.
Even better, though, would be learning how to qualify for better funding options through business credit coaching. If you want to learn how to build business credit so you can obtain up to $100K in funding in 30 days, enroll in Business Credit Workshop today.