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How to Get a Small Business Loan.
What are they?
Provider of short-term small business loans from 4 months to 2 years.
How popular is it?
More than $4.8 billion in loans to over 100,000 small businesses.
Who will qualify for a loan?
Must be in business for at least 4 months, have an average minimum monthly gross revenue of $4,500, and a credit score of at least 550.
Who are they right for?
Businesses that don’t need a large loan and/or might not qualify with other lenders due to their industry, short time in business, or poor credit scores.
Non-profits, adult-related, bail bondsmen, gambling, illegal Federal drugs, collection agencies, religious institutions, legal services, real estate, travel agencies, insurance, flea markets, finance companies, employment agencies, direct marketing, consultants, consignment companies, car sales, accountants, auction houses.
Personal Guarantee required?
As little as 10 minutes with online application.
Where do they lend?
All 50 states, but not Puerto Rico or US Virgin Islands.
How much do they lend?
$2,500 to $150,000.
How much can I qualify for?
CAN Capital typically lends 8% to 10% of your business’ annual gross revenue.
For how long?
Borrow from 4 months to 2 years.
Cost/Interest rate of loan?
Effective Annual Percentage Rate currently ranges from approximately 62% to 85% (see cost section for more details).
How do payments work?
Fixed payment is automatically deducted each weekday from your business checking account. You’re eligible for a 6 % prepayment discount if you pay off the loan early.
Your business’s tax ID, your social security number and driver’s license, previous 3 months of business bank statements and/or credit card processing statements, and the first page of previous year’s business tax return.
Businesses that have had difficulty qualifying for a bank loan and businesses that have been in operation for only a few months have the most to gain from CAN Capital. You must have monthly revenues of at least $4,500 and a credit score of at least 550. You can qualify for a CAN Capital loan if you’ve been in business for at least 4 months, a significantly shorter time frame than the 1 to 2 years that most lenders require.
One advantage of CAN Capital is its prepayment discount. If you pay off your loan early in one lump sum payment, you will receive a 6 % discount off the remaining balance of the loan. To be eligible, you must prepay 90 or more days after the loan term begins. We have not found any other short-term lender that offers such a generous prepayment offer.
With CAN Capital, you can generally only qualify for a loan that is 8 % to 10 % of your business’ annual gross revenue. For a business with $100,000 annual revenue, that is $8,000 to $10,000, which may not be enough to finance large expenses, such as payroll or new equipment.
The other drawback to CAN Capital is the high interest rates. The APRs charged by CAN Capital range from approximately 62% to 85%. This is multiple times higher than what traditional banks charge and slightly higher than what other alternative lenders, such as OnDeck, charge.
- Personal Credit Score: 550 or higher.
- Years in Business: At least 4 months.
- Revenues: Average $4,500 per month gross revenue.
- Other Requirements: No bankruptcies in last 18 months and no excessive tax liens.
- Industry Exclusions: Adult-related, bail bondsmen, gambling, illegal Federal drugs, collection agencies, religious institutions, legal services, real estate, non-profits, travel agencies, insurance, flea markets, finance companies, employment agencies, direct marketing, consultants, consignment companies, car sales, accountants, auction houses.
Collateral Required? Yes. CAN Capital’s website says that they do require business collateral but not personal collateral as security for the loan. This means that business equipment, machinery, etc. will serve as collateral.
Personal Guarantee Required? Yes. A personal guarantee means that the lender can come after your personal assets (e.g. car and house) if you don’t pay the loan. You are individually accountable for repaying the loan, even if your business closes down. Your personal credit score can also be affected if you personally guarantee a loan and don’t make timely payments.
Upfront Fees – None.
Structure of Debts: Rather than quoting an Annual Percentage Interest Rate (APR), CAN Capital quotes the total dollar amount you have to pay back. This makes it difficult to compare different loan types and providers. To help you make an easy comparison we have converted CAN Capital’s quoted dollar cost into an APR in the cost section below.
Servicing Fees: None.
Are interest rates variable? No
How Loan Costs Work With CAN Capital
If you are familiar with a home loan or credit card loan, you have likely heard interest rates on those loans quoted as an APR. APR measures how interest and other fees add up over the course of a year. APR is the cost of the loan over one year, expressed as a percentage.
Instead of quoting an APR, CAN Capital gives you the dollar cost of the loan. For example, in the loan shown in the screenshot below, you would payback $4,600 back in total if you take out a 4-month, $4,000 loan.
While quoting things this way makes it easy to understand the total dollar cost of the loan, it does not make it easy to compare CAN Capital loans with other loan products. To do that, you need to convert the above numbers into an Annual Percentage Rate (APR). This can be done using the calculator below.
Since OnDeck charges for loans in a similar way to CAN Capital, we can use the same calculator to figure out APR for both. Just remember to input $0 for the origination fee because CAN Capital doesn’t charge one. You should also incorporate the weekday payment schedule for CAN Capital.
Here are the total dollar costs, effective Annual Percentage Rate (APR), and weekday payments for different sample loan amounts (there are approximately 22 weekdays per month).
- $4,000 for 4 months – $4,600 and 85.15% APR ($53/weekday)
- $10,000 for 6 months – $12,100 and 77.49% APR ($92/weekday)
- $15,000 for 9 months – $19,725 and 75.48% APR ($100/weekday)
- $25,000 for 12 months – $33,750 and 62.45% APR ($128/weekday)
As you can see, you are paying around 62% APR on the low end and 85% APR on the high end of the scale for a CAN Capital loan. This is even higher than the APR charged by other alternative lenders, such as OnDeck and Kabbage.
Below is a screenshot from CAN Capital’s loan calculator outlining total costs for a sample $4,000 4-month loan. All else being equal, the longer time that you borrow for, the costlier your loan will be. The total repayment amount on this 4-month $4000 loan is $4600. If you borrow the same amount for 12 months, you will have to pay back $5,400.
CAN Capital’s application process is pretty quick. It takes about 10 minutes to fill out their online application and get approved. Alternatively, you can apply by phone.
What happens after approval? Upon approval, you are notified about the amount of the loan that you qualify for, and term, and fees. The money can be in your account within 3 business days.
What information/documents are needed for the application? Your business’s tax ID, your social security number and driver’s license, previous 3 months of business bank statements and/or credit card processing statements, and the first page of previous year’s business tax return.
Do they need online access to any systems – Quickbooks, PayPal, bank accounts? Yes, they need access your business checking account.
Is there a credit report pull? If so at what point in the process? Yes. Whether you apply by phone or email, CAN Capital pulls your personal credit history as part of the initial application process. It’s a “hard” credit pull, so it can temporarily hurt your credit score.
What credit reporting service do they use? Your average score from Experian, TransUnion, and Equifax.
Does CAN Capital report to the credit bureaus? After 20 days of non-activity, the account will be considered to be in default. At that point, CAN Capital will report to both personal and business credit reporting agencies.
Loan Sizes and Terms
What are the minimum / maximum terms of the loan? Minimum is 4 months, and the maximum is 2 years.
What is the minimum / maximum amount of the loan? Minimum is $2,500, and the maximum is $150,000 (the maximum amount you can generally qualify for is 8% to 10% of your business’ annual gross revenue).
Payment Methods & Schedule
- Schedule of Payments: Every weekday
- Payment Initiation: CAN Capital withdraws a fixed small amount from your business bank account every weekday.
- Method of Payment: ACH.
- Penalties For Missing Payments: No missed payment penalties. However, CAN Capital initiates a deduction from your business account every weekday, so if it’s overdrawn, your bank may charge you an overdraft fee.
- What Happens on Pre-Payment? If you pay off your loan early in one lump sum payment, you will receive a 6 % discount off the remaining balance of the loan. The prepayment window is 90 calendar days after the loan term begins through the end of the loan term.
CAN Capital has phone, live chat, and email support for applicants and borrowers. There is also an FAQ page on their website.
A word of caution is warranted here. In my experience, CAN Capital’s customer service was not on par with other lenders. There were times when their reps and the website gave me conflicting information (for instance, about whether they charge origination fees or require business collateral). As with any loan, we recommend you carefully review the terms and get your questions answered before signing your loan agreement.
US-based or international? US-based. Can Capital is located in New York, NY.
Support hours? Monday-Friday 8 AM – 8 PM EST and Saturday 8 AM – 5 PM EST.
Other Lending Products
In addition to small business loans, CAN Capital offers merchant cash advances from $5,000 to $150,000. Merchant cash advances are a lump sum payment to a business in exchange for a fixed share of the business’ future credit and debit card sales. This is an option for businesses that may not have the regular cash flow needed to make fixed loan payments because the lender takes a percentage of daily sales. No personal guarantee is required for a merchant cash advance.
Unfortunately, merchant cash advances are generally very costly (ranging from approx. 60-200 % APR) and are only an option for businesses with a high volume of credit/debit card sales.
For additional information, take a look at our guide to merchant cash advances.
Need some money for your business? Click here to get our FREE Guide:
How to Get a Small Business Loan.
The Bottom Line
CAN Capital may be a good choice for businesses that have been unsuccessful in obtaining a bank loan because of credit history or time in businesses. If you have monthly revenues of $4,500, a credit score of at least 550, and have been in business for 4 months or more, you can qualify for a CAN Capital loan.
However, you can generally only qualify for a loan that is 8 % to 10 % of your business’ annual gross revenue, which might not be enough to finance large purchases.
CAN Capital loans also have high interest rates. The APRs charged by CAN Capital, ranging from approximately 62% to 85%, are multiple times higher than what traditional banks charge and higher than what other alternative lenders, such as OnDeck, charge. On the plus side, you can receive a prepayment discount with CAN Capital if you’re in the position to pay off the loan early.