Strategic Funding Reviews

See above info for Strategic Funding Reviews. If you are a current or former SFS customer, we’d like to hear from you. How was your experience? Are you a repeat user?

Strategic Funding Spotlight

·       Headquarters: NYC, New York

·       In Business Since: 2006

·       Funding Category: Small business lender

·       Total Amount Funded: $2 billion+

·       Primary Financing Method: MCA Financing

·       Popular Offer: Term Loans/ AR Factoring

Strategic Funding Source is headquartered in Midtown Manhattan, with additional offices in Rockwall, Texas and Arlington, Virginia. The company was founded in 2006 and has reportedly provided over $2 billion in small business funding to over 25,000 businesses. Many of these companies would have not qualified for traditional bank financing.

They provide a variety of business financing options including:

·       Revenue Based Financing

·       Small Business Loans

·       Accounts Receivable Factoring

·       Equipment Financing

·       Medical Financing

Revenue based financing is another term for merchant cash advances. It’s an alternative funding method where a company will advance cash to a business ‘backed’ by future credit card sales (revenues).

Typically, the money is repaid on a fixed, daily basis, via automatic deduction out of the business bank account. It is this daily calculation that leads to the extremely high APRs (annual percentage rate).

We don’t normally highlight cash advance companies because of potentially exorbitant rates. But Strategic Funding Source is a bit different than most.

First, they are one of the largest funders in the space with revenues of approximately. In fact, SFS may have made the single largest merchant cash advance in history, a $4 million advance to an unnamed Las Vegas business.¹ That scale allows them to fund B2C companies of virtually all credit quality, as long as they have consistent credit card sales.

Second, SFS Capital also offers accounts receivable factoring services, a rather unusual product offering for a business capital advance company (see Rapid Advance reviews since they also offer both options).

Still, they do have something in common-they both provide small business funding based upon future revenues. For capital advance companies, this is credit card sales (or bank account balances) and for factors this is accounts receivable. But one focuses on B2C operations (MCAs) while factoring is for B2B operations or, the rare exception, individuals (offered by Fundbox).

Of course, we prefer invoice finance over cash advances due to the 1-lower rates and 2- additional services provided such as collection and credit evaluation.

Strategic Funding’s requirements are not particularly stringent. Here are some of the information applicants will provide:

·       Prior 3 months of business bank statements.

·       Length of time in business

·       Annual Revenues

·       FICO score

How is Strategic Funding Different from Factoring Companies?

SFS Capital is not a factoring company per say, but does offer invoice factoring solutions that assist B2B customers including construction, wholesalers, staffing and manufacturing. But SFS Capital offers financing to businesses not generally covered by factoring companies.

These include:

·       Hotels

·       Restaurants

·       Farms

·       Medical Suppliers

·       Auto Shops

·       Funeral homes

·       E-Commerce

·       Dentists

·       Chiropractors

Disaster Loans

In the wake of Hurricane Michael, SFS Capital announced on their website availability to emergency disaster funding via a subsidiary of theirs, Colonial Funding Group. Colonial is a business lender that has a peer-to-peer component, similar to Funding Circle and Lending Club. (Check our Funding Circle reviews and Lending Club reviews for more information.)

 As long as the incident has actually been ‘declared’ a disaster, small businesses may be eligible for funding backed by FEMA and the SBA. This funding reportedly comes regardless of credit history (we wrote about such emergency funding options in our bad credit business loans article).

Strategic Funding Pros and Cons

In addition to the Strategic Funding reviews above, we reiterate these key pros and cons:

Main Pros:

·       Offer accounts receivable factoring.

·       Can lend as little as $10,000.

·       Over 50% are repeat customers.

·       Strong management team w/ experience at traditional banks. (JP Morgan Chase, CS).

·       Also provide disaster loans via Colonial Funding Network.

Main Cons

·       Merchant cash advances are an expensive funding option.

·       Interest and factor rates not readily available without applying.

·       Credit availability partially dependent on investor demand for securitized loans.²

 

For more information about Strategic Funding Reviews:

Who Uses SFS?

Where does their funding come from?

Do they offer specialty financing options?

 

¹https://debanked.com/2011/08/6313177-4-million-merchant-cash-advance-provided-by-strategic-funding-source/

²https://www.prnewswire.com/news-releases/strategic-funding-closes-105-million-inaugural-securitization-expandable-to-500-million-300662365.html