The main points
Both American Express Business Line of Credit and Fundible provide business credit lines.
Choose the American Express Business Line of Credit if you have fair to excellent credit and want a line of credit.
Choose Fundible if you have bad credit and wish to compare different sorts of loans.
Small business loans are one of the best ways for companies to obtain financing for start-up or expansion. With so many different lenders out there, how do you choose the best business lender?
American Express and Fundible are both lenders that deal with small businesses, however they serve totally different markets. American Express is suitable for applicants with fair credit who seek a business line of credit. Fundible has a more flexible loan offer and can even approve companies with lower credit scores.
American Express Business Line of Credit
The American Express Business Line of Credit is a line of credit that allows businesses to borrow up to $250,000 for short-term purposes such as purchasing inventory, covering unexpected expenses, or financing other purchases. However, unlike regular lines of credit, which utilize interest rates to determine borrowing costs, these loans employ a proprietary mechanism to compute borrowing costs.
Instead of charging interest, the American Express Business Line of Credit charges a monthly fee based on the outstanding balance of the line of credit. And the longer the credit line and the worse your credit, the higher the cost of borrowing. Here is a look at the monthly fee structure:
- For six months loans: 3.00% to 9.00%
- For 12-month loans: 6.00% to 18.00%
- For 18-month loans: 9.00% to 27.00%
Borrowers benefit from the fact that these business lines of credit demand only a 660 credit score and a $3,000 average monthly income to qualify. Just bear in mind that each business is unique and must be approved and reviewed.
Pros
low income requirements
Open to business owners with sufficient credit.
Loan amounts range from $2,000 to $250,000.
Cons
Borrowing costs can be high.
Unnatural pricing makes it difficult to compare to alternatives.
A personal guarantee and business assets are required.
Fundible business loans
Bankable small business loans include business lines of credit and term loans. The lender works with borrowers who have fair or worse credit, sometimes accepting companies that have owner credit scores as low as 450.
Fundible also offers equipment loans and SBA loans. But because the lender is open to working with companies with bad credit, the interest rate can be much higher than the Amex business line of credit. Some of their loans charge rates as high as 3.5 percent per month, which can make borrowing money very expensive.
Pros
You can qualify with either good or bad credit.
Many types of loans
a large amount of debt
Cons
$100,000 in annual income is required.
Loans can be very expensive.
Some loans come from partners.
How to choose between Amex and Fundible
American Express and Fundable are both good for borrowers with credit scores outside of the good to excellent range. While Fundible is more accessible and offers more types of loans to business owners with bad credit, American Express lines of credit and business credit cards may be more beneficial to borrowers who may qualify.
Choose the American Express Business Line of Credit for fair to excellent credit
The minimum credit score requirement for American Express is 660, which is aimed at borrowers with at least fair credit. If you have a strong credit score, a line of credit may be a reasonable choice. Fundible is a better option if your score is less than 660.
A Fundible choice for bad credit
Fundible, which requires a credit score of at least 450, makes loans to consumers who are turned down by American Express. If you can't meet the minimum American Express credit score of 660, look into Fundible.
Choose American Express for business credit cards
American Express business credit cards may help with everything from working capital to luxury trips.
For example, the American Express Blue Business Cash™ Card has no annual fee and offers 2% cash back on purchases of up to $50,000 annually, then 1 percent. By contrast, no business credit card can be financed.
Choose Fundible for larger loan amounts
The Fundible provides SBA and other loans with a maximum borrowing of $10 million. This easily exceeds American Express' $250,000 limit, making fundible business loans the choice if you need to borrow a large amount of money.
Choose the fundible for different types of business loans.
American Express offers only one type of business loan - a line of credit. The financing includes lines of credit, term loans, SBA loans, and special equipment loans. Lenders looking for variety should look into small business loans.
Alternative
If you are considering a business loan, you may also want to consider other lenders.
For example, Bank of America is a traditional commercial lender that offers a wide variety of loans. It does not have endorsements that can be easily funded but generally costs less. It offers SBA loans of up to $5 million and lines of credit in excess of $250,000, making it a solid option if you're looking to borrow a larger amount.
SMB Compass may be a viable option if you have less-than-perfect credit. It offers nine types of loans, including lines of credit, SBA loans, and equipment financing. Some of their loans have a credit score of at least 600 but limits as high as $5 million.
SBA loans
Small business owners should also consider SBA loans, thanks to their higher loan amounts and tight interest rates. SBA 7(a) loans and 504 loans are appropriate for borrowers with good to excellent credit, but SBA also has other types of loans to help a wide variety of small business owners.
Depending on where you operate your business, you may qualify for an SBA Community Advantage loan. These loans are specifically intended to help underprivileged communities. You can use this program to obtain an SBA 7(a) loan of up to $350,000. It is a popular choice for companies that need working capital. They can be used to purchase equipment or land as well as other needs.
If you would like a line of credit, CAPLines come in several forms and allow you to obtain a working capital line of credit of up to $5 million.
The SBA also offers small loans of up to $50,000. These loans are often targeted at minority-owned businesses and used as working capital loans.
Bottom Line
If you have fair to excellent credit and need a line of credit, check out American Express. But if you are having a hard time finding affordable loan options, Fundible business loans are worth considering. Make sure you take the time to compare loan rates from other lenders. It always pays to shop around and find the most affordable business loan for your needs.
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