Credibly vs. SMB Compass: Which small business lender is right for you?

Credibly and SMB Compass are unusual in the online small business loan space because they both provide a full range of loan options. They also offer loan amounts that can cover small-dollar expenses or purchases or expansions costing millions of dollars. Many online lenders zone in on a few loans like business lines of credit or short-term loans, and most stick with low loan sizes.

But Credibly accepts business owners with a lower personal credit score than SMB Compass. SMB Compass stands out with low interest rates mirroring traditional banks, but many of its loans require at least fair credit.

To help you compare the best small business lenders, here’s an in-depth look at Credibly compared to SMB Compass.

Credibly vs. SMB Compass at a glance

Both Credibly and SMB Compass have the capability of supporting a wide range of loan amounts from a few thousand dollars to $10 million. Both accept newcomers to the business world with just six months of time generating revenue.

Credibly business loans are more accepting of bad credit, though your business will need higher annual revenue. But you can get the longest repayment terms and lowest-interest loans by choosing SMB Compass versus Credibly.

*Credibly lists $180,000 in annual revenue on its website, but a spokesperson stated the minimum as $300,000.

Credibly business loans

Credibly offers an array of business loan choices, either as a direct online loan or through lending partners. You can choose from working capital loans, merchant cash advances, business lines of credit, term loans, equipment financing, invoice factoring or SBA loans.

Both Credibly’s working capital loan and merchant cash advance can finance up to $400,000 for as long as 15 months. It also offers a prepayment discount of 20 percent off its remaining fees if you pay off the loan early. Credibly business loans do charge a factor rate, a fee applied to the entire loan amount that’s known for creating high borrowing costs.

But unlike traditional lenders, this fintech lender may accept small business owners with bad credit and minimal time in business. Credibly’s working capital loan and merchant cash advance both keep the credit standard down to a 550 personal credit score.

As a caveat, you’re most likely to get approved through Credibly with a personal credit score of 675, three years in business and a steep $540,000 in annual revenue. It also has a list of preferred industries: restaurants, contractors, electrical work, repair shops and offices or clinics of health practitioners.

Pros

• May accept bad credit
• Prepayment discount
• Same-day funding available

Cons

• High revenue required
• Charges factor rates
• Mixed loan details

SMB Compass business loans

SMB Compass business loans include business lines of credit, equipment financing, term loans, invoice financing, inventory financing and SBA loans. Having this many options is unusual for an online lender, especially one that keeps its lending in-house.

If you need startup business financing, you could qualify for term loans or equipment financing, provided you have six months to one year in business. But other lending criteria for term loans are strict — you need a 680 personal credit score and at least $500,000 in annual revenue.

Another strength of SMB Compass is its low interest rates, starting as low as 7.99 percent for asset-based loans. These rates are on par with what you’d find from traditional bank lenders, but you’ll likely need strong credit to qualify for SMB Compass’s most favorable rates.

Pros

• Low starting rates
• Startup loan options
• Long repayment terms

Cons

• Requirements vary by loan
• Doesn’t approve sole proprietors
• Not available in California

How to choose between Credibly and SMB Compass

Credibly and SMB Compass both offer small business loans that startup businesses or subprime borrowers may be able to qualify for, though most need high revenue. For other business owners, both lenders provide a variety of small business loans that can serve different financing purposes.

But when choosing the best lender, Credibly business loans work well if you need fast cash with the chance of getting approved within a few hours. SMB Compass works best for strong credit borrowers looking for the lowest interest rates or long repayment terms.

Choose Credibly if you have bad credit

Of the two lenders, Credibly accepts the lowest minimum credit scores, as low as 550, for its working capital loan and merchant cash advance. Both loans are offered directly through Credibly, so you can receive financing within 24 hours if your loan application and documents are in order.

Credibly can also match you with SBA loans through its partners, though the lending standards are higher. Its website states that generally, lenders accept credit scores of at least 620, $100,000 in annual revenue and two years in business. Lending requirements can differ from lender to lender.

On the other side, SMB Compass offers two loans with minimum credit scores of 600: its business line of credit and equipment financing. It also offers asset-based lending and invoice financing that rely more on the assets and invoices used to get the loan approved.

Choose SMB Compass if you have good-to-excellent credit

SMB Compass extends business loans with competitive terms and interest rates. You will need strong credit to qualify for most loans, and lending requirements vary by the type of loan you get.

For example, its term loans offer interest rats starting at 8.99 percent, and SBA loan rates start at 8.50 percent. But you need a personal credit score of at least 680 for term loans, while SBA loans and bridge loans require a credit score of 650.

You should also bring strong financials and credit to the table if you’re eyeing a low-interest business loan. SMB Compass’s lowest starting rates are likely reserved for strong credit borrowers. Credibly accepts credit scores lower than what SMB Compass requires, but its ideal borrower will have a personal credit score of 675 and up.

Choose SMB Compass for long-term loans

SMB Compass also helps small businesses keep loan payments down to a manageable level, made possible by unusually long repayment terms. You can get business term and SBA loans with terms up to 25 years or equipment loans up to 10 years.

A 25-year term is the standard for SBA loans, but terms this long are rare to find for term and equipment loans, especially in the online business loan space. Plus, its business line of credit, inventory financing and invoice financing are revolving loans. This means you can get approved for financing and then tap the available credit as needed or on a regular basis.

Alternatives

Let’s say you’ve pored over Credibly and SMB Compass’s business loan options and decided they don’t meet your business financing needs. As a traditional bank lender, Bank of America provides a variety of business loans. Its loan options include term loans, equipment financing and multiple business lines of credit serving startups to well-established businesses.

If you need a lender with more relaxed lending requirements, Fundible is known to offer bad credit business loans for credit scores in the 500s. Many of its loans can support millions of dollars worth of financing.

Otherwise, a business credit card can work well to cover small, short-term or emergency expenses. Not only can you build business credit and earn rewards for the purchases you make the most. But you also bypass any revenue and business experience standards that most small business loans set. Most business credit cards simply look at your creditworthiness to approve you.

SBA loans

While you can get SBA loans through Credibly and SMB Compass, you need to meet fairly high standards to secure this government-backed financing. SBA loans are partially secured by the Small Business Administration and offer competitive payment terms and interest rates.

But businesses unqualified for standard SBA loans can look at SBA microloans or Community Advantage loans. Both are designed to serve disadvantaged businesses, such as minority business owners or low-income areas. SBA microloans can provide funding up to $50,000 through specific SBA-approved microlenders. The loans usually keep credit and other criteria low, some not looking at your credit history at all.

Bottom line

SMB Compass and Credibly offer similar loan options with the ability to fund high loan amounts. You’re more likely to pay less in interest with SMB Compass. But some of SMB Compass’s small business loans have strict minimum standards, such as a 680 personal credit score and $500,000 in annual revenue.

Both lenders also fall in the best-for-fast lending category. You may want to prequalify with these and other lenders to make sure you’re getting the best loan offer before you sign on the dotted line.

Frequently asked questions

• Is Credibly an SBA lender?

  No, Credibly doesn’t offer SBA loans directly. Credibly works with partner lenders to offer SBA loans, which means you can apply through Credibly and get matched with a lender offering SBA loans.

• What services are offered by SMB Compass?

  SMB Compass offers business loans as its sole service. You can get a variety of business loans through SMB Compass, including a business line of credit, SBA loan, equipment financing and asset-based loans.

• What is the minimum credit score for Credibly?

  Credibly may accept credit scores as low as 550, though the lender looks at other requirements before making a final decision. For example, your business will need strong annual revenue to qualify.