Small business owners have many options for financing, but SBA loans remain the gold standard. The drawback to SBA loans is that most lenders have strict qualifications, and getting your funds takes weeks or months.
Some lenders, like Ready Capital, can help expedite the process as an SBA-preferred lender. The company also offers USDA B&I loans. However, it might not be the right fit for every small business.
We can help you determine if the non-bank lender meets your financing needs by providing the pros, cons, and how to apply. Specifically, we’ll answer these questions and more:
Ready Capital is a multi-strategy real estate finance company that provides commercial real estate (CRE) loans, residential mortgages, and small business loans. Its subsidiary, ReadyCap, primarily handles its small business loan programs, which are SBA loans and USDA B&I loans.
The company launched in 2012. It is based out of New York, NY. Most of its loans are backed by CRE holdings.
Larger enterprises can pursue various CRE loans with the company, but today we’re focusing on their small business offerings under the ReadyCap brand. The lender offers two loan options for small businesses.
The US Small Business Administration (SBA) oversees the SBA loan program. Instead of applying to the SBA, potential borrowers must apply to an approved lender, like ReadyCap.
The government agency sets rules for lenders to follow, including capping interest rates and fees. The SBA also partially guarantees up to 85% of the loans.
With backing from the federal government, lenders can offer higher borrowing amounts at lower interest rates and longer repayment terms.
As an SBA-preferred lending institution, ReadyCap can expedite certain aspects of the SBA loan application, which usually takes between a few weeks and two months. You can use the funds for most business purposes, including commercial real estate, marketing, working capital, expansion, acquisition, and refinancing business debt.
The US Department of Agriculture (USDA) Business & Industry (B&I) loans help support small businesses in rural communities. ReadyCap is licensed to offer USDA B&I loans in most states.
The qualifications depend on the loan type.
ReadyCap indicates you need a minimum personal credit score of 680 to qualify for an SBA loan. Unlike other lenders, it doesn’t list a minimum annual revenue. It’s also one of the few lenders that offer SBA funding to startups, so there’s no time in business requirement.
Applicants must also meet the SBA’s eligibility criteria, which are:
The lender does not list qualifications for USDA B&I loans but provides access to USDA’s convenient eligibility tool.
To be eligible for SBA loans, the lender requires a debt service coverage ratio (DSCR) between 1.15 and 1.30. You must also make an equity injection (down payment), usually around 10% of the total loan amount.
USDA B&I loans are only available in areas with a population of 50,000 or fewer. Most small business owners would qualify for SBA loans over B&I loans.
ReadyCap offers SBA loan options for veteran-owned businesses (at least 51% of ownership). The program makes it easier for veterans to obtain an SBA loan.
The SBA requires lenders to report SBA loan information to the major credit bureaus. With most business loans, reporting to the credit bureaus is optional. That means you could potentially build your business credit with a ReadyCap SBA loan.
The lender’s website does not publish information on a business loan referral partner program, but some online reviews mention using partners. ISOs and business loan brokers should contact the lender directly to ask about offering its services to their small business clients.
ReadyCap uses LenderAI to streamline the borrower and broker experience. Follow these steps to apply.
ReadyCap provides an online contact form to start the process. You can also call the lender to get started. Either way, you’ll provide some basic information about yourself, your business, how much you’re borrowing, and how you’ll use the money.
Once you start the process, a ReadyCap representative will reach out to help you complete the process.
You will likely need to provide extensive documentation, which could include the following:
The SBA loan process is complex, and some businesses might need to provide more information than others. Your dedicated representative will help you complete the process and get funded.
The repayment process for an SBA loan is straightforward. You will repay the amount you borrowed (principal) plus interest and fees in fixed monthly payments.
In most cases, you’ll set up automatic payments using an ACH transfer. Alternatively, you can work with the lender to make other payment arrangements.
Small business owners who get a USDA B&I loan will also have fixed monthly payments. The ReadyCap website does not publish information on renewals.
You can typically save interest on ReadyCap business loans if you pay them off early. Most times, there won’t be an early repayment fee unless the loan terms are for 15 years or more. In that case, there is a prepayment penalty if you pay it off in the first five years. The penalty reduces each year.
One of the primary benefits of the lender is that it is an SBA-preferred financing company, meaning it can help get loan approval and funding faster. It can also offer high borrowing amounts at low rates.
The company charges very few extra fees, partially because the SBA caps what a lender can charge. It’s also one of the few SBA lenders that offers startup and franchise financing.
Veteran-owned businesses can also benefit from the company’s veteran business loan programs. Small business owners get longer repayment terms, which lowers your monthly payments.
While the ReadyCap website provides helpful information, it doesn’t publish its rates and fees. SBA lenders sometimes include additional charges like packaging fees. Potential borrowers must contact the lender or apply to get their rates and fee structure.
Despite being a non-bank lender, ReadyCap doesn’t offer an online application. You can complete a contact form to start the process, but you won’t get information on pre-qualification until you speak to a representative and follow the instructions to apply.
Government-backed loans typically have strict qualifications and take a while to finalize. You should also be aware that the company has negative reviews. However, most of those are related to the now-defunct PPP loan program.
Here’s a quick summary of the benefits and drawbacks of ReadyCap small business loans.
Yes, Ready Capital is a legitimate lender. It is a publicly-traded company and licensed lender. While it does have many bad reviews, it’s still a legit company.
Yes, ReadyCap is an SBA-preferred lending institution, which means it can bypass the SBA review process and approve loans more quickly. Not only is it a preferred lender, but ReadyCap is one of the most active lenders for SBA 7(a) loans.
ReadyCap has many negative reviews but some positive ones as well. It has a D- rating at the Better Business Bureau (BBB). It has a 1 out of 5 BBB rating on 59 customer reviews, and there have been 76 complaints closed in the last three years.
It is not BBB accredited. Lenders tend to have much better ratings on Trustpilot, but it only has a 3.6 out of 5 rating on over 950 reviews.
Most of the negative reviews and BBB complaints center on the PPP loan program enacted during the Covid-19 pandemic. Many online and non-bank lenders were ill-prepared for PPP loans, and the program was very complicated. Even so, a few customers mentioned they went out of business because the online lender did not disburse the loan proceeds on time.
There are also some non-PPP complaints about the customer service team and mix-ups surrounding loan proceeds. A few customers mentioned the company trying to pressure them into buying insurance.
We should mention that despite the high volume of negative reviews, 64% of the company’s reviews on Trustpilot have 5 stars. The positive reviews discuss the customer service team and the smooth process.
Several customer reviews state the company helped save their business during the pandemic. Multiple users called out their customer service representatives by name when praising the service.
The lender doesn’t publish much regarding qualifications, except that SBA loans require a credit score of 680. Otherwise, the only way to determine eligibility is to contact the company directly and speak with a representative.
If you applied and were declined, the denial letter should explain why. If not, you can contact the lender directly for more information.
Fortunately, there are many alternative lenders to consider if ReadyCap doesn’t work out for you. You can find lenders offering SBA loans, several of which provide a convenient online application.
If you were denied because you’re not eligible for an SBA loan, many loan options have lower qualifications. You might be interested in one of the following small business loans:
ReadyCap is best suited for small business owners seeking an SBA loan or USDA B&I loan. The process for getting these loans can take weeks, but the company can help expedite SBA loans as a preferred lender.
Business owners with a credit score below 680 or those that need quick funding must find a different lender. Some lenders offer same-day funding, for example. Additionally, as the company doesn’t provide an online application, you could potentially receive the same loans with a similar application process at the local branch of a traditional bank or credit union.
Even so, the non-bank lender’s AI tool and convenient online customer service might make it worth it. Ensure you understand all the lender’s details and costs before you decide on a loan.
Based on user reviews, available products, and website transparency, we rate ReadyCap as 3.5 out of 5. The lender is definitely worth considering for SBA loans, but the lack of additional lending products and the negative user reviews hold it back from a higher score.