It’s Time to Look at Online Lender Balboa Capital

Balboa Capital is one of several lending companies in the online space. We look at their specifics and drill down into the details of their business funding options.

As always, we gave this lender every opportunity to give us up to date information. But note, if we receive updated information in the future, we will be sure to update this blog post.

Background

Balboa Capital is located online here: https://www.balboacapital.com/. The company is headquartered in Costa Mesa, California. They have satellite offices in San Ramon, California; Scottsdale, Arizona; and Spokane, Washington. We could not locate an actual physical address for this company. 

Balboa Capital’s contact page is here: https://www.balboacapital.com/contact/. We were unable to determine how long this online lender has been in business.

Offerings

Balboa Capital serves as a direct lender. They offer small business loans, equipment leasing, and commercial financing. And they also offer vendor financing, franchise financing, and business cash advances. 

Small Business Loans

This lender will loan up to $250,000. Your company can get 3 to 24 month terms. There is no collateral needed, and the cash is provided in days. There is a time in business requirement of at least one year. Another requirement is $300,000 or more in annual revenue. Furthermore, they will ask for your personal credit score.

Equipment Leasing

Balboa Capital will loan up to $250,000. Your company can get 24 to 72 month terms. There is no collateral needed. There is a time in business requirement of at least one year. Another requirement is $300,000 or more in annual revenue. 

Commercial Financing

Balboa handles transactions of up to $100 million. They will ask about your time in business. One requirement is $10 million or more in annual revenue.

Vendor Financing

Balboa also provides financing to customers for your equipment. This is for equipment vendors. There is a time in business requirement of at least one year. Another requirement is $300,000 or more in annual revenue.

Franchise Financing

Balboa Capital will loan up to $250,000. Your company can get 24 to 84 month terms. There is no collateral needed. There is a time in business requirement of at least one year. Another requirement is $300,000 or more in annual revenue.

Business Cash Advances

Balboa Capital will advance from $5,000 to $250,000. Your company can get 3 to 18 month terms. There is no collateral needed. There is a time in business requirement of at least one year. Another requirement is $10,000 or more in monthly credit card and debit card deposits.

Fees

Their fees are not listed on the Balboa Capital website. Reviews online (on Yelp) report that there are termination fees and substantial late fees. 

Furthermore, there are several negative ratings on Balboa’s Better Business Bureau page. See: https://www.bbb.org/sdoc/business-reviews/small-business-loans/balboa-capital-corporation-in-costa-mesa-ca-13126386

Advantages 

One advantage is the size of Balboa Capital’s business cash advances. Another advantage is how you will not need collateral in order to get such an advance.

Disadvantages

A very big disadvantage is that their fees have no listing on their website. Only you can decide whether this apparent lack of transparency is an issue for you. The Better Business Bureau complaints are also troubling.

A Viable Alternative: Building Business Credit

Business credit is credit in a business’s name. It doesn’t connect to an owner’s personal credit, not even if the owner is a sole proprietor and the solitary employee of the business. 

Because of this, an entrepreneur’s business and personal credit scores can be very different.

The Advantages

Considering that business credit is separate from personal, it helps to safeguard a small business owner’s personal assets, in the event of legal action or business insolvency.

Also, with two distinct credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles buying power.

Another benefit is that even startups can do this. Heading to a bank for a business loan can be a recipe for disappointment. But building small business credit, when done the right way, is a plan for success.

Consumer credit scores depend on payments but also additional components like credit use percentages. 

But for small business credit, the scores truly just hinge on if a company pays its invoices promptly.

The Process

Establishing company credit is a process. It does not happen automatically. A business has to actively work to build small business credit. 

Having said that, it can be done easily and quickly, and it is much more rapid than developing personal credit scores. 

Vendors are a big part of this process.

Performing the steps out of order results in repetitive rejections. Nobody can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Business Fundability

A business must be fundable to loan providers and merchants. 

Hence, a business needs a professional-looking website and email address. And it needs to have website hosting from a merchant like GoDaddy. 

Also, company telephone and fax numbers need to have a listing on 411. You can do that here: http://www.listyourself.net. 

Also, the company phone number should be toll-free (800 exchange or the like).

A business also needs a bank account devoted purely to it, and it has to have every one of the licenses necessary for running. 

Licenses

These licenses all must be in the exact, accurate name of the business. And they must have the same small business address and telephone numbers. 

So, note, that this means not just state licenses, but potentially also city licenses.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Working with the Internal Revenue Service

Visit the Internal Revenue Service web site and get an EIN for the business. They’re totally free. Choose a business entity like corporation, LLC, etc. 

A business may start off as a sole proprietor. But they absolutely need to switch to a kind of corporation or an LLC. 

This is to limit risk. And it will take full advantage of tax benefits.

A business entity matters when it pertains to tax obligations and liability in case of litigation. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. Nobody else is responsible.

The best thing to do is to incorporate. You should only look at a DBA as an interim step on the way to incorporation.

Setting off the Business Credit Reporting Process

Start at the D&B website and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s sites for the company. You can do this at fastcs.wpengine.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process. 

By doing so, Experian and Equifax have activity to report on.

Vendor Credit Tier

First you must establish trade lines that report. This is also known as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score. 

And with an established business credit profile and score you can begin to get credit in the retail and cash credit tiers.

These sorts of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor workwear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who give you starter credit when you have none now. Terms are oftentimes Net 30, versus revolving. 

So, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may need to apply more than once to these vendors. So, this is to confirm you are trustworthy and pay promptly. Here are some stellar choices from us: https://oldcs.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/ 

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are businesses like Office Depot and Staples. 

Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the company’s EIN on these credit applications.

One instance is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are service providers such as BP and Conoco. Use this credit to purchase fuel, and to fix, and take care of vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the company’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or better and a 411 small business telephone listing. 

Shell may say they want a specific amount of time in business or profits. But if you already have enough vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Cash Credit Tier

Have you been responsibly handling the credit you’ve gotten up to this point? Then move to the cash credit tier. These are businesses like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or better. And they also want you to have 10 trade lines reporting on your D&B report. 

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established business.

These are companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are feasible.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and attend to any errors as soon as possible. Get in the practice of taking a look at credit reports and digging into the details, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: fastcs.wpengine.com/monitoring. 

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Equifax costs about $19.99.

Update Your Records

Update the relevant information if there are mistakes or the relevant information is incomplete. 

Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any errors in your records. Mistakes in your credit report(s) can be corrected. But the CRAs typically want you to dispute in a particular way.

Get your business’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies usually means you send a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and keep the original copies.

Fixing credit report inaccuracies also means you specifically detail any charges you challenge. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail to have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit responsibly! Never borrow more than what you can pay off. Monitor balances and deadlines for payments. Paying off on schedule and completely does more to increase business credit scores than nearly anything else.

Establishing company credit pays off. Great business credit scores help a business get loans. Your credit issuer knows the company can pay its financial obligations. They recognize the business is bona fide. 

The company’s EIN links to high scores and credit issuers won’t feel the need to demand a personal guarantee.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Upshot

An apparent lack of transparency should be of concern. However, if your company cannot come up with collateral and needs to get a cash advance, then Balboa Capital funding could be your solution. The variety of offerings is encouraging. No matter what, be sure to read the complaints on the BBB website. And, if they do not apply to your unique situation, then they should not carry as much weight as complaints which do.

And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with care, and decide whether working with Balboa Capital will be good for you and your company. In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.