Financial services companies like Fundwise Capital can help connect qualified business owners to funding programs that meet their business needs. Fundwise is unique because it offers a credit counseling service and provides startup funding.
However, the company won’t be the right fit for every business. The costs can run high, especially with the fees the service charges. It also has a high credit score requirement and long funding times for an alternative lending platform.
This lender review covers the benefits and drawbacks of the company and how to apply to help you decide if it’s the right fit for your company. Specifically, we’ll answer these questions and more:
Fundwise Capital is a financing services company that aims to help entrepreneurs acquire business funding. The company is not a direct lender. Instead, it helps connect small business owners to funding programs with third-party lenders and capital funding companies.
Its service matches qualified applicants to funding programs that meet their needs. Business owners looking to improve their credit rating could benefit from the company’s credit counseling program.
The company specializes in startup funding, offering some unique programs. However, it also provides funding for established businesses. Customers include a diverse range of individuals, including small business owners, real estate investors, and more.
The Utah-based company launched in May 2020. It advertises funding programs to finance business needs, such as:
The exact lending program you get depends on the lender. Fundwise’s business financing programs are unsecured, meaning you don’t have to put up collateral.
This benefits new business owners who don’t have the assets to pledge as collateral.
Here are the available programs through Fundwise.
Fundwise’s partners offer both personal and business lines of credit. Startups are more likely to get a personal line of credit while existing companies can get a business line of credit.
With this form of financing, the lender provides an established credit limit. You can draw funds as needed in any increment if you don’t exceed the credit limit.
You only pay interest on what you draw. The company offers both revolving and non-revolving lines of credit.
A revolving line of credit replenishes the credit limit as you pay back what you draw like a credit card. For example, if you draw $20,000 from a $150,000 credit limit and repay $10,000, your new credit limit is $140,000.
A non-revolving line doesn’t replenish, so the account closes once you’ve drawn all available funds. It might be possible to renew the line of credit at that time, but it depends on the lender and your credit rating.
Installment loans are another name for term loans, but it includes short-term, medium-term, and long-term options. With a term loan, you receive a large sum upfront, which you repay plus interest and fees in fixed payments. It’s the most familiar loan type for most people.
These loans typically last several years, accumulate interest over time and get paid monthly. You can use term loan proceeds for various business purposes, such as working capital, purchasing equipment, etc.
This type of financing is best for one-time large projects or purchases.
Some applicants get matched to business credit cards. A business credit card operates like a personal credit card.
Unlike personal credit cards, though, business credit cards typically offer some perks and programs unique to businesses. While financing business expenses on a credit card can be expensive, there are some ways to reduce the risks.
Most business credit cards come with a 21-day grace period where you won’t pay any interest if you pay it off in that time. Also, Fundwise can offer cards with an introductory 0% APR for the first six to twelve months, which is excellent for startups. You can save money on interest with these programs.
After that, most business credit card APRS fall between 15%-26%. Many business credit cards also come with unique perks, such as points, cash back, and vendor discounts.
Potential borrowers must meet the following qualifications:
Since the company specializes in startup funding, it doesn’t have a time in business or revenue requirement. However, the minimum personal credit score requirement of 680 is much higher than most alternative lenders.
Fundwise indicates that you can bring on a co-signer or credit partner if you don’t meet the 680 credit score requirement.
The company takes a unique approach to credit checks. Applying for a loan through the service automatically enrolls you in their credit monitoring program Fundwise Optimize.
You will upload the results of your personal credit inquiry. This allows Fundwise to evaluate your credit without doing a hard credit pull.
The company’s website doesn’t provide much information on the products offered or how they work. You must apply and receive loan or credit card offers to see your available borrowing amounts, terms, and interest rates.
Since Fundwise is not a direct lender, it acts more as a high-level middleman between your business and the lender. Fundwise can help you with some issues, but you will have to contact the lender directly at other times.
Since it doesn’t make money from interest like a direct lender, it makes money from fees charged to clients, Fundwise partners, and Fundwise Optimize credit counseling. You can expect to pay a $500 origination fee and a 9% approval fee on installment loans and lines of credit.
Fundwise partners are marketing affiliates and referral partners who generate qualified leads to get funding through the service. Loan brokers and ISOs can offer Fundwise business loans to their SMB clients, especially new business owners.
The application process begins online. You’ll answer questions about your business, credit score, and funding needs.
The initial process takes about 60 seconds to complete. The approval process includes uploading your initial credit report and signing up for the credit monitoring service.
You might also have to provide proof of income. Startups might have to provide proof of personal income.
At this point, a Funding Manager might reach out to gather more information about your business. The team will work to put together the right funding program for your needs.
It takes about 10-21 days to receive your funds, which is long for an alternative lending platform.
The company doesn’t publish any information about the post-funding process. It provides some “best case scenario” videos after you receive funding, but most customers don’t find them very useful.
Installment loans will carry fixed installment payments. Most lenders require daily, weekly, or monthly payments.
For lines of credit, you only repay what you draw, plus interest. This is true for credit cards, although lines of credit tend to have stricter repayment periods.
Fundwise doesn’t provide information on loan renewals, but several customers commented on renewing with them. However, we don’t know if there are renewal incentives, such as more significant borrowing amounts or lower interest rates.
A significant Fundwise Capital advantage is that it helps startups get business funding. While alternative lending options provide many benefits to businesses that don’t qualify for traditional financing, many exclude startups.
The application process is quick and easy. You get a credit monitoring account, although not every business owner would need that or find it beneficial. The service can help improve personal credit and begin to build a business credit rating.
You can save the time, effort, and stress of researching and applying to different lenders independently. The service helps connect you with financial institutions where you will most likely qualify.
All financing options are unsecured, so you don’t have to use any assets as collateral. The company also offers multiple types of financing and long-term financing.
Startups might get an introductory period of zero-percent interest rates on some products. You can fund businesses expenses to get the company up and running and then pay the debt off interest-free when revenue starts coming in.
The Fundwise website is not very informative and doesn’t provide resources. You must apply to see what’s available for your business.
Most alternative lending options carry higher rates than traditional lenders. This is usually because of the convenience of online lending and because most online lenders work with businesses with low credit scores.
However, one area where Fundwise differs from other alternative lending platforms is that it has a high credit score requirement of 680. Business owners with excellent credit can usually qualify for better options, such as a lower-cost SBA loan.
Adding to the cost are the fees the platform charges for finding funding. The origination and approval fees can be costly.
Fundwise’s lending partners also take a while to disburse funds, typically 10-21 days. While that might be quicker than banks, it’s significantly slower than many alternative lending options. By contrast, some online loan lending companies offer same-day funding. The average is usually 3-10 business days, depending on the loan type.
Here’s a quick summary of the benefits and drawbacks of Fundwise.
Yes, Fundwise Capital is a legitimate business. While it doesn’t have accreditation from the Better Business Bureau (BBB), it does have an A+ rating at the watchdog site.
Like many lending platforms, reviews for Fundwise tend to be polarized, with some customers praising the service and others rating it very low. The reviews tend to be more positive than negative, as it has a 4.2 out of 5 rating on over 200 reviews at Trustpilot.
Most positive reviews discuss being very happy with the customer service team, with several users mentioning their funding manager by name. Users talked about how Fundwise Capital acts professionally.
Several reviews talked about the ease of the application process. A few reviews talked about getting the funding to launch their business.
Another common thread in positive reviews is the credit monitoring product. Customers discussed getting a clear and concise plan to improve their credit and qualify for funding. Many customers recommend Fundwise Capital.
Negative reviews complain about a lack of communication from the company’s representatives. Several say the amount of funding they received was far less than quoted amount during pre-approval. A few felt like they were misled on this point.
Several reviews talked about difficulty canceling the credit monitoring account. One customer said they were denied a refund on the upfront credit analysis fee even though they canceled before the funding manager began the funding process.
For loan brokers, you should know that there are a few complaints on the BBB about not receiving commissions when promised. While many brokers and affiliates praise the company, it’s something to consider.
Since the company connects applicants to its network of third-party lenders, there are two parts to the loan request. You first must meet Fundwise Capital’s requirements for pre-approval. Then you also have to get final approval from the lender during underwriting.
Fundwise doesn’t have a revenue or a time in business requirement, but you do need a credit score of at least 680. Note: some customers stated they only qualified for a business credit card despite having credit scores in the upper 700s.
Other issues on credit reports, such as a high debt-to-income ratio or a recent bankruptcy, could also trigger a denial. If you were declined, the denial letter should explain why. You can contact Fundwise or the lender directly if you need more information.
Fortunately, there are many alternative lending options if Fundwise doesn’t work for you. Many lenders and lending marketplaces work with business owners with low credit scores, with several offering bad business credit loans.
Fundwise is best suited for small business owners and aspiring entrepreneurs with excellent credit who are seeking startup capital. The service offers attractive options, such as introductory periods with 0% or low interest rates.
Personal and business lines of credit also help startups get ongoing funding to run their businesses.
Established businesses with excellent credit can likely find lower-cost options. Companies with those requirements would also have more control over the type of funding they receive.
The company could also be a good idea for business owners who want to boost their credit before applying for a small business loan. The credit counseling program could help you secure funding with higher borrowing amounts and lower interest rates after improving your credit score.
Based on user reviews, products, and costs, we rate the company at 3.75 out of 5. It could be a good option for startups if you qualify for the 0% interest period. But the lack of information on the site, high fees, and limited borrowing amounts hold it back from a higher score.
Disclaimer: The Fundwise Capital trademark is owned by Fundwise Capital and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Fundwise Capital.