CAN Capital is an alternative lender focused on small and medium-sized businesses. They offer short term (3 month) to multi-year loans. We like to think of them as the “Capital One” of small business lending. They will lend to almost any business, as long as they are able to price their product appropriately.
They are great for last-minute, quick funding. Note that they usually won’t lend more than 10% of your prior year’s revenues. So, depending on how much you make, it may not be enough to avoid a working capital crunch.
They’ve been around for almost 20 years. If they have all of the required data, they can make you an offer within the hour.
They offer three products:
- Business Term Loan – They’ll give you up to $120,000, to be paid back in up to 2 years.
- Merchant Cash Advance (MCA) – They “advance” you cash and you pay them back from your credit or debit card receivables
- Trak Loan – Near as we can tell, it’s a term loan, but rather than pay them back on a monthly basis, you pay them back on a daily basis based on your credit card receivables, like an MCA.
The bare minimums for CAN to lend to you include:
- Having a business (This is important! You need to have established a business, with a business checking account!)
- Gross revenues of $4,500 or more per month
- In business for 4 or more months
- Relatively stable revenue and expenses
- FICO of 550 or higher (this loan is primarily priced based on your business cash flow, so that’s why this number is so low)
However, depending on the product, they may tweak and tighten these qualification rules.
Note that this loan is collateralized by your business assets (like your equipment and machinery). And, in the case of business loans, you are making a personal guarantee you’ll pay them back. If you don’t pay them back, they can lay claim to your personal assets.
Fees and Interest Rates
For business term loans, including the ‘TrakLoan’, interest rates on the low end are around 13% annually. But, that’s a best case scenario. Expect to pay much more (We’ve seen proposals for shorter-term loans that, if annualized, means 50% interest).
There are usually not any upfront fees, as they are typically rolled into the interest rate. Sometimes, they’ll quote an origination fee, but we think you can roll that into the loan if you are intrerested.
For merchant cash advances, you’ll be quoted a ‘factor rate.’ The factor rate is defined as the multiple of the loan that you’ll be expected to pay back. A factor rate of 1.14 on a $20,000 loan, for example, means that you’ll be expected to pay back 1.14 * 20,000 = $22,800. The rate at which you pay back the loan determines what the annualized interest rate is. Pay it back quickly, you’re looking at an APR of upwards of 80%! Pay it back slow, and maybe you’ll eek out in the 20% range.
How to Apply
Like other lenders, you need to do a little prep work to gather some information prior to applying for a loan.
CAN Capital wants the following items as part of the application process:
- The business owner’s driver’s license and social security number
- Your business’s Tax ID
- Last 3 months (6 to be sure) of your business bank statements
- Your prior year’s tax return
Once you have gathered these documents, then head over to their online form to begin the process. Click here to get started. They’ll run a hard inquiry on your credit, as an FYI. On the plus side, they are extremely quick when it comes to letting you know whether you qualify, and for how much.
This kind of loan is expensive! CAN does short term loans, which means their interest rates are sky-high compared to a traditional line of credit.
And, furthermore, if you choose a merchant cash advance, it’s really hard to get a grasp on how much exactly you’re paying in interest for your loan, since it’s tied to your daily credit / debit card volume. This kind of opaque pricing practice isn’t very consumer friendly – though it is popular within the industry.
Finally, note that CAN Capital typically only lends up to 10% of your revenue. For small businesses we’ve spoken with, by the time you’re looking at alternative lenders, your cash crunch is likely more than 10% of your annual revenue.
There are two things we like about CAN Capital:
- They are fast
If you’re able to get your paperwork in order, they’ll be able to turn around a qualification assessment and proposal within the same business day.
- They will lend to a lot of different businesses.
Like most lenders, they have a list of industries they’d rather not touch (including services businesses). But, with a minimum FICO score of 550, they care most that a business makes steady cash, and less about the business owner’s personal credit profile.
We think CAN is a good option if any of the below is true:
- Even though you’re generating solid revenue, you don’t qualify for a loan from a bank
- You’re short on time
- You’ve been in business for less than a year
- You personally have impaired credit
It’s an expensive loan, to be sure. (And, in the cash of a merchant cash advance, it’s not even a loan). You may find it cheaper to shop around. But, if you’re in a hurry, consider CAN Capital.