Is QuickBooks Financing Right for Your Business?

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Is QuickBooks Financing Right for Your Business?

Intuit QuickBooks is one of the most recognizable brands in small business finance. So, odds are, you’ve come across the name QuickBooks accounting software in some form or fashion while running your small business.

But did you know there was such thing as QuickBooks financing for small businesses?

That’s right—the name that’s practically synonymous with small business accounting has ventured into the small business lending industry. QuickBooks loans directly from QuickBooks come in the form of short-term loans through a program they call QuickBooks Capital.

And QuickBooks Capital also features a loan marketplace, so if you’re interested in a different form of funding other than QuickBooks loans, then they’ll try and connect you with one of their lender partners.

That’s the general idea, but to know whether QuickBooks financing is the right move for your business, you’ll need the details. Read our QuickBooks financing review to learn all you need to know to figure out if this funding source is the right fit for your business.

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A Rundown on QuickBooks Financing

QuickBooks provides business financing through their QuickBooks Capital program by reaching out to QuickBooks users whose QuickBooks accounting data suggests they’re good candidates for financing.

QuickBooks financing can come in multiple forms, most of which will be available through their lending partners. However, QuickBooks also lends directly in the form of short-term loans ranging from $1,500 to $100,000, with rates from 3.13% to 8.49%, and repayment terms from six to 12 months.

The Details on the QuickBooks Capital Short-Term Loans

Short-Term Loans

If you’re looking for financing that comes directly from QuickBooks, then your one option is the QuickBooks Capital short-term loan. Just like any short-term loan, this form of QuickBooks financing comes in the form of a lump sum that you’ll pay back, plus interest, with weekly payments over an agreed upon repayment term.

Unlike most other short-term loans, however, the QuickBooks Capital short-term loan doesn’t come with any miscellaneous fees. You’ll only be paying interest if you take on a short-term loan from QuickBooks Capital.

That’s the general idea on this kind of QuickBooks Financing, but let’s take a look at the details on what it can offer your business.

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    QuickBooks Loan Amounts

    QuickBooks loans can range in size from as little as $1,500 to as much as $100,000. The loan amounts that QuickBooks financing can offer directly will be ideal for smaller-scale financing. However, if you want to access larger amounts of funding, QuickBooks will likely connect you to one of their lending partners through the marketplace portion of QuickBooks Capital (more on this feature later).

    QuickBooks Loans Rates and Fees

    The cost of QuickBooks short-term loans will consist solely of interest, as QuickBooks won’t charge any miscellaneous fees—like origination or prepayment fees—for your funding.

    To give you an idea of what these interest costs would be, QuickBooks states that interest rates for their six-month loans can range from 3.13% to 8.49%, which would translate to APRs from 12% to 32%.

    They also provide a sliding sample loan feature  on the QuickBooks Capital homepage, which could help you get a better idea of what interest rates and APR you might qualify for based on your desired loan amount and credit profile.

    Of course, the interest rates and APRs attached to QuickBooks loans will depend on a variety of factors, so QuickBooks doesn’t guarantee rates or even qualification before they’re able to put your application through a full underwriting process.

    QuickBooks Loans Repayment Terms

    QuickBooks loans will come with repayment terms ranging from six to 12 months. That said, because QuickBooks financing won’t come with a prepayment penalty, you’ll be able to save an avoided interest if you’re able to pay down your QuickBooks loan ahead of your planned repayment schedule. This prepayment incentive is actually pretty rare for short-term funding. Short-term lenders other than QuickBooks Capital typically name a specific amount of debt you have to repay—no matter how much.

    QuickBooks Loans Requirements

    One thing that’s definitely worth noting from the get-go: QuickBooks financing is only available to QuickBooks users that QuickBooks decides are eligible to apply. They will reach out to you through your QuickBooks account if your QuickBooks data seems to indicate you’re a good candidate for a QuickBooks loan.

    To decide whether or not you qualify for a financing, QuickBooks will look at a number of factors. First and foremost, you need to be a QuickBooks user. Based on the accounting information you have in your business’s QuickBooks account, QuickBooks will extrapolate knowledge on your business’s cash flow, receivables, and liabilities. They’ll also take a look at your business history, your personal credit, and business credit.

    Generally speaking, QuickBooks likes to see a personal credit score of at least 580 and at least $50,000 in revenue. Additionally, they say that you shouldn’t have any personal or business bankruptcies in the past two years before applying. Of course, QuickBooks will review each application they receive that meets these guidelines one-by-one. So, though they generally work with businesses with these minimum credentials, they don’t guarantee funding by any means.

Getting QuickBooks Financing Through Their Marketplace

If you’re looking for a different form of financing than the short-term loans that QuickBooks provides directly, then you can also access different forms of funding through the loan marketplace that the QuickBooks Capital includes.

Through this program, QuickBooks connects businesses to invoice financing, more short-term loans, lines of credit, medium-term loans, and SBA loans. Their partners include direct lenders like Fundbox,  Funding Circle, and BlueVine.

Most of QuickBooks’ lender partners will have more strict borrower requirements than QuickBooks itself does, though. So, if you’re not able to qualify for a direct QuickBooks loan, then qualifying for one through their marketplace might be tough to do.

The Advantages and Disadvantages of QuickBooks Financing

The Advantages of QuickBooks Financing

So, now that we’ve combed through all of the details on this two-pronged QuickBooks Capital program, let’s begin to zoom out and consider what these details mean for your business funding search.

To start, we’ll highlight the logistics of QuickBooks financing that are the main draws to this business funding option. What can QuickBooks financing offer business owners that other, similar business funding options can’t? Let’s take a look.

    Streamlined Application Process

    Because QuickBooks will already have access to much of the information needed for underwriting, applying for QuickBooks financing will require very little effort on your part. The data that you enter into your QuickBooks accounting software every day is the data that other lenders typically need to see to get an idea of your business’s financials. That QuickBooks already has access to this financial data for its users is likely one of the main motivations that lead them to begin offering financing through QuickBooks Capital in the first place.

    No Extra Fees for QuickBooks Loans

    If you access QuickBooks financing through one of their direct loans, then you won’t have to pay any miscellaneous fees for your financing. The only cost of capital that will come attached to QuickBooks loans will be interest—and nothing else. This is extremely rare for small business loans and even more rare for short-term small business loans. As a reminder, almost no short-term loans will come with prepayment incentives like QuickBooks loans do. With QuickBooks loans directly from them, you’ll only have to pay interest for how long you take to pay your loan back. Even if you’re ahead of schedule paying down your QuickBooks loan, you won’t have to pay a prepayment penalty.

    And QuickBooks loans won’t come with an origination fee, either, which is also extremely rare in the industry. All in, you can rest assured that the only cost of a QuickBooks loan—borrowed directly from QuickBooks—will be interest.

    QuickBooks Capital Marketplace

    Another upside to working with QuickBooks Capital will be their ancillary funding options. If you’re not interested in the short-term QuickBooks loans that they lend directly to businesses, then they’ll try and connect you with lender partners who offer other funding options. These options will include more short-term loans, along with invoice financing, term loans, business lines of credit, and even SBA loans.

    These lending partners will have their own underwriting processes, requirements, and terms, so their products won’t be the same as direct QuickBooks loans by any means. That said, they will still use your business’s QuickBooks accounting data to streamline their underwriting processes.

The Disadvantages of QuickBooks Financing

For all of the things that QuickBooks Capital does right, there are also a few notable imperfections to the program. Here are a few details on QuickBooks financing that might make you hesitate on choosing it for your business.

    Invite-Only Financing

    The streamlined application process that QuickBooks Capital offers does come at a price—it’s so efficient and straightforward in part because QuickBooks financing is by invitation only.

    That is, you’ll only gain access to the QuickBooks Capital application if you get an invitation to apply in your QuickBooks account. And QuickBooks sends this in-app invitation to users that they deem eligible for QuickBooks financing based on the data they have stored in their account.

    This invite-only nature of QuickBooks financing is a serious obstacle for proactive business owners looking to apply for funding from QuickBooks Capital, especially if their QuickBooks account doesn’t necessarily directly reflect their business’s cash flow for some reason.

    Limited Marketplace Options

    Sure, the QuickBooks Capital marketplace provides alternative funding options beyond the short-term QuickBooks loan that they provide. Nonetheless, the QuickBooks Capital marketplace seems to only have around seven lending partners  in it. This will leave applicants with really only one or two lender options for each product available. So, if you’re set on which type of financing you need for your business, then you won’t have many offers to choose from if you look for this financing through QuickBooks Financing.

Top Alternatives to QuickBooks Financing

If you’re not certain that QuickBooks financing is the right move for your business, then it’s time to start shopping your options. Even if you feel pretty confident QuickBooks Capital is a solid source of funding for your business, it never hurts to gain context on its top competitors.

Based on what kind of funding you were hoping to access through QuickBooks Capital, here are your top alternatives to QuickBooks financing.

Kabbage

If you’re looking for a business line of credit, then Kabbage will be a solid QuickBooks financing alternative for your business. Kabbage will sync with your accounting software—no matter which brand it is—for their automated underwriting process. And if you qualify for their line of credit, Kabbage can get you funded in less than a day. Plus, Kabbage will have monthly scheduled payments—not daily or weekly payments—unlike most other short-term lenders, QuickBooks included.

Fundation

Hoping to access longer-term financing through an online lender? Look to Fundation as your best alternative to QuickBooks Capital. This lender offers term loans with repayment terms as long as four years and amounts as large as $350,000. Plus, if you’re able to move fast with your paperwork, Fundation can fund your application in as little as a day.

The Bottom Line on QuickBooks Financing

After reading up on all the ins and outs on this multifaceted program, what’s the verdict on QuickBooks Capital? Though we think the short-term QuickBooks loan is a remarkably affordable option for QuickBooks users who are able to access it, the limitations of its invite-only structure kind of take away from the excitement this short-term loan would normally elicit from us. Additionally,  the limited marketplace that QuickBooks Capital also encompasses isn’t much of a value-add for the program as a whole.

Overall, if you’re able to access a short-term loan directly from QuickBooks, then you should seriously consider choosing it as your business’s source of capital. But if they forward you onto one of their partners, you should consider moving your search for funding to another loan marketplace or to a direct lender.

 

Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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