Fundation is an online direct lender based in New York City. Since its founding in 2011, Fundation has been disbursing direct loans to small businesses throughout the United States. Fundation’s CEO and co-founder, Sam Graziano, has over a decade of investment banking and private equity experience, and with this experience he is solely responsible for the strategic direction and fiscal growth of the company.
Fundation’s website is relatively very transparent when compared to other lenders, especially big banks. The FAQ page is helpful in answering most typical questions that a borrower may have. Other benefits include:
Easy Online Application
Fundation has a lot to offer when it comes to small business loans. As an online direct lender, they offer the chance to avoid all the hassle that big banks sometimes create surrounding the loan process. Plus, the entire application, approval, and disbursement process is done online, meaning that it is both convenient and accessible from anywhere.
How it Works
The loans Fundation offers come with a Simple Interest Rate. This type of interest rate means that your recurring interest is based on the remaining amounts that need to be paid off, not based on the initial amount of the loan. For instance, a borrower that receives a loan from Fundation for $100,000 and pays off half of that loan within the first year will then only be charged interest on the remaining $50,000 left to be repaid. With other banks or lenders, the borrower is responsible for paying interest on the original amount ($100,000) for the length of the loan.
Low Interest Rates
Fundation offers a low minimum interest rate for prospective borrowers. Their rates start at 7.99% but can go up to 25%(according to their calculator). These rates are set upon the individual evaluation of each borrower and the associated risks (including the industry of the business, personal credit history, and business payment history). Borrowers will of course find out their rates before accepting the loan, and can use Fundation’s loan calculators to estimate bi-monthly payments.
Additionally, Fundation offers up to $500,000 in funding, a high maximum loan amount for an independent lender. Businesses looking for funding independent of big banks offer struggle to secure enough funding, and for this concern Fundation offers a worthy solution.
Loans through Fundation can be repaid through a flexible repayment schedule of 1-4 years. The amounts given to borrowers who wish to pay back in long- or short-term schedules will vary, but this flexibility gives borrowers the option to build customized repayment schedules.
Fundation’s website also states that payments are debited to the borrower’s business checking account twice a month, and these payments can be submitted electronically.
In addition to convenience of online applications and approval, Fundation advertises that they can disburse an approved loan on the same day of its application and approval. This quick turnaround is something most big banks cannot offer, and it is one of the many benefits of borrowing money from an independent lender.
Fundation does not charge any prepayment fees either. Borrowers are free to prepay all or a portion of their loans, and can avoid the recurring interest costs by doing so.
To summarize, the main benefits of Fundation are:
- Online application, approval, disbursement
- Simple Interest Rate
- Interest rates as low as 7.99%
- Loan calculator available
- Up to $500,000 in funding
- 1-4 year repayment schedules
- Bi-monthly repayment
- Same day loan disbursement
- No prepayment penalties
Negative aspects of Fundation’s lending process are few and relative—meaning that even these “negative” aspects of Fundation may be a better deal than what bank lenders are able to offer. Limitations include:
High Origination Fee
Fundation does require an origination fee of at least $1,000. The maximum possible amount of this fee is not disclosed, and borrowers are required to wait until their loan is approved to find out the official amount of their origination fee. For some borrowers, this open-ended origination fee could present a problem. But the free application process makes it simple to find out if if the actual origination fee is too high for a prospective borrower.
When comparing to other independent lenders, Fundation has some slightly more demanding requirements for qualifying borrowers. These requirements include being in business for at least 2 years and bringing in $250,000 in annual revenue. While a specific credit score is not required, however personal credit scores are required as part of the application process and they will be considered in loan approval.
In short, the negative aspects of Fundation can be summarized like this:
- Origination fee of at least $1,000
- Unknown closing fees
- Requirements to borrow:
- In business for 2 years
- At least $250,000 in annual revenue
*Star Rating is determined by evaluating APR range, minimum credit score requirement, revenue requirement, length in business requirement, and other related approval data.