Rapid Advance has Become Rapid Finance
In case you haven’t heard, small business funder Rapid Advance is now officially Rapid Finance. That means their catchy commercials (‘Rapid Advance, they didn’t say no…’) will have to be scrapped or cleverly dubbed over. You may be wondering, why the name change in the first place?
What’s in a Name?
The rebranding is actually an upgrade for the Bethesda-based online lender. In fact, we recently raised our score for Rapid Finance (see Rapid Advance reviews) to reflect the likely reputational tailwind.
Specifically, negative connotations surrounding the term “advance” was a major reason for the change. Now there’s nothing wrong with most MCA or merchant cash advance companies (outside of annual percentage rates as high as 384%)1. But the backlash surrounding the Confessions of Judgement abuses in New York have caused several alt-fi companies to walk back their ‘cash advance’ marketing.2
In addition to the predatory lending stigma created by a few bad apples, more established small businesses are less likely to shop for more stringent (and cheaper) financing like SBA loans at a company with “advance” in the name.
Rapid Finance Spotlight
· Headquarters: Bethesda, Maryland
· In Business Since: 2005
· Funding Category: Online lender
· Total Amount Funded: $1 billion+
· Primary Financing Method: Direct Lending
· Popular Offer: Term loans.
Rapid Advance (now Rapid Finance) was founded in 2005 and has reportedly funded over $1 billion for thousands of small businesses. The company’s background comes from the business capital advance industry and many of their customers might not qualify for traditional bank loans. Today, Rapid Finance has a wide range of funding options for customers including restaurants, salons, cleaning services, auto shops, diners and liquor stores.
Their financing options Include:
· Small Business Loans
· Merchant Cash Advances
· Bridge Loans
· Business Lines of Credit
· Asset Based Loans
· Commercial Real Estate
· SBA Loans
· Healthcare Cash Advances
Given the wide array of small business funding options, we expected Rapid Finance to have morphed into more of a marketplace lender like Fundera or Lendio. For example, it’s unusual to see business cash advances, SBA loans and invoice factoring all from one company.
But we spoke with Nick in the Detroit, Michigan office who offered that about 85% of their funding is now direct loans. It’s obvious that the name change has not negatively affected the lender’s capabilities in any way.
That leaves just 15% to be referred out to various lenders. Unfortunately, Rapid Finance does not reveal their lending partners until a customer is rather far along in the application process. This is similar to Biz2Credit, who also does not disclose their partners.
We suspect their partner list is actually quite high, considering they actively solicit partner applications from finance brokers, asset based lending companies, credit card processers, equipment leasing shops and factoring companies right on their site.
How is Rapid Finance Different from Other Alternative Lenders?
Unlike most alt-fi companies, Rapid Advance offers healthcare cash advances, known as HCAs. They provide businesses in the healthcare space immediate net working capital against a percentage of future insurance receivables. This transaction is somewhat similar to medical factoring, in that healthcare companies are fronted business capital as an alternative to waiting for future reimbursements. A Rapid Finance HCA can advance $5,000 to $500,000. And there are no fixed daily or weekly repayments as with some advances.
HCA customers must provide the following documentation:
1. Voided check from a business checking account.
2. Government-issued photo ID, like a driver’s license.
3. Last three statements from your small business bank account.
Another difference is that Rapid Finance does not offer invoice finance options themselves. While they likely utilize names we like including Fundbox or Bluevine, we would prefer they provide the service themselves. This way a stronger relationship between the small business and financing company can be fostered.
A factoring company provides upfront funding, the advance, for B2B companies who typically wait weeks or months for customers to remit credit payments. Major names include OTR Capital, Riviera Finance and FleetOne.
Then there are the fintechs such as Ondeck Capital, Lending Club and Kabbage loans (see Kabbage reviews) that provide online small business loans. But unlike these funding options, MCAs, HCAs and accounts receivable factoring doesn’t incur additional debt for the small business.
Calculating Rapid Advance’s Rebranding
In addition to the Rapid Finance commentary above, we reiterate the change’s pros and cons:
· Could attract a higher quality customer base.
· Smart risk management play.
· Still able to offer MCA and HCA products.
· Reputational boost.
· Potential marketing costs increases.
· Apparently, no more song-and-dance commercials
Other lenders like Rapid Finance:
· Balboa Capital
· Reliant Funding
· Jet Capital
· Smart Business Funding
· BFS Capital
· SOS Capital