Wednesday, July 20, 2016

Receiving An Offer From Funding Circle

After submitting your online loan application with Funding Circle and moving through the underwriting process with the help of your personal account manager, it’s time to wait for your loan offer letter to arrive. This usually happens within a couple of days, or as soon as the lender has received and reviewed all of your information.

When you do get your loan deal, you’ll also receive a phone call from your account manager. They’ll walk you through the offer and answer any questions you might have about your specific loan.

To understand your offer letter, take a look at breakdown of what you can expect to see to in your loan deal from Funding Circle:

What’s in Your Loan Offer?

1. The Nuts and Bolts

In this first section of your offer letter, you’ll see all the pertinent details of your business loan. This way there are no surprises.

This information is listed under your business loan details and will usually include:

  • Your company name
  • The lender (Funding Circle)
  • Your approved loan amount
  • Your disbursement amount, which is the amount of your loan minus the origination fee
  • Your annual interest rate, which is a fixed rate for the life of your loan and typically ranges from 5.5 – 28%
  • Your loan term, which is usually between 1 and 5 years
  • Your closing date, which is the date when your loan is actually funded
  • Monthly payments

Here you’ll see your monthly payment amount. These fixed payments are due on the same day each month, starting on the date one month after your closing date.

  • Total repayment amount

This figure encompasses all of your scheduled payments, including both the principal and interest that you’ll pay over the life of your loan term.

  • Specified commercial purpose

This term explains the purpose of your loan.

For example, if you’ll use your funding to buy inventory or refinance existing debt, this clause will state that information. It’s important to note that your loan can only be used for these specific business purposes and can’t be earmarked toward personal, family, or household matters.

2. Fees

This short section of your loan offer letter includes any fees you can expect.

“We have a high bar of transparency and everything is laid out for the borrower,” says Rebecca Schapiro, Funding Circle’s director of brand and product marketing.

This part of your offer letter is particularly short because Funding Circle has no application fee or prepayment penalties, she says.

Here’s what you’ll typically find:

  • Origination Fee

This is a non-refundable fee that covers Funding Circle’s costs to evaluate and originate your loan. This typically ranges from one to six percent. When this is added to the interest rate, the resulting percentage figure comprises the total cost to fund your loan.

  • Prepayment Penalty

There’s a line item for this but, because Funding Circle does not charge a prepayment penalty, you will see the word “none” here.

3. The Final Words

This area includes anything else you need to know or provide to the lender in order to complete the loan funding process.

This generally includes:

  • Guarantors

You’ll see your name here, along with any business partners you might have.

  • Collateral

This explains how your loan is secured by a lien on your business assets (with the exception of property). It also states that you and any other listed guarantors pledge your personal and non-affiliating business assets to guarantee the loan.

  • Documentation

Here you will agree to review and sign the loan documents. This clause states that acceptance of your loan documents and the timing of your funding depend on submission and approval of all required documentation.

You’re Almost There!

Once you’ve signed the loan offer and provided Funding Circle with any outstanding documents, you should receive your funding in your bank account within 2 days.

Coming Soon…

If you’re thinking about getting a loan through Funding Circle and want to have a better idea of what your loan interest rate will look like before you move through the underwriting process and receive your loan deal, you might want to apply next month.

By end of the summer, Funding Circle will reveal a new feature that’ll give you the ability to see your conditional interest rate based on the self-verification information you provide on your application, explains Schapiro.

Although this figure could change after your underwriting process, it will give you an upfront look at your interest rate. At the moment, explains Schapiro, Funding Circle’s rate range is quite large, so the new feature will give potential borrowers a better idea of what their final rate will be without having to wait for an offer letter.

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