Businesses struggling to get the funding necessary to obtain new equipment can try National Funding as an alternative to banks. Funds are available for a wide range of industries, and low credit isn’t a barrier to applying. With flexible terms and straightforward monthly payments, National Funding may be an option for high-risk companies in need of equipment leases or loans.
Established in 1999, National Funding is an alternative lender offering a variety of loans to merchants directly and through its network of partners. To date, the company has funded over 35,000 businesses with more than $2 billion in loans. It also participates in sponsorships for local sports teams and seeks to support small businesses in and around southern California and San Diego, where its offices are located.
National Funding’s products include small business loans, merchant cash advances, equipment loans and equipment leasing. Equipment funding is provided for both new and used equipment and machinery across multiple industries. The lender’s website states its team is “passionate about helping small business owners win” and values the relationships they have with customers. With a unique company culture and a commitment to high performance, National Funding is working to make itself stand out among other alternative lenders.
For its equipment loans, National Funding requires a minimum FICO score of 620.
Application requirements for National Funding state merchants must be in business for at least six months before seeking equipment funding, but the application form includes a “less than six months” option, suggesting the lender may be open to working with newer companies. The application also omits questions regarding credit score or financial status. According to ValuePenguin, National Funding considers earnings more than credit score when determining eligibility, so businesses in good financial standing may be able to qualify even if they fall short of other requirements.
In addition to the wide range of niches covered by its small business loan products, National Funding works with numerous industries in which equipment financing is often required. Equipment loans and leases may be issued for:
Many of these industries require the latest equipment and technology to maintain efficiency, provide good customer experiences and ensure the health of patients. Since it’s not always financially possible to upgrade when new models become available, businesses may require funding to remain viable and stay ahead of the competition.
While some of the markets to which National Funding lends are commonly served by both banks and alternative lenders, others are high risk. Merchants in these industries may have a difficult time being approved for loans, especially those in need of trucks, trailers and heavy equipment. A high potential for loss combined with the inherent risk of operating machinery used to haul, build, farm and perform other potentially hazardous tasks means any lender extending financing to these industries must deal with the possibility of the loan not being paid back.
Most lenders offering equipment and transportation financing require the equipment itself as collateral. National Funding has no requirement for collateral and therefore takes on a higher level of risk by issuing unsecured loans.
Terms range from two to five years (24 to 60 months) for National Funding’s equipment loans and leases. Payments are withdrawn from a company’s bank account via an automated clearing house (ACH) on a monthly basis for the duration of the terms. Merchants may choose to pay more than the monthly minimum if cash flow allows.
Long term lengths make monthly payments easier to manage. For companies without the cash to make big equipment purchases up front, qualifying for a 60-month lease could grant access to new technologies necessary to increase efficiency and provide better service. However, short terms may affect a merchant’s ability to invest in growth if payments require a significant outlay of cash each month.
Merchants seeking to compare prices between National Funding and other lenders can provide their name, email, business name and phone number via a short online form to get in touch with a member of the National Funding team. Basic requirements for equipment loans are straightforward and include:
Other areas of the lender’s website state $100,000 in gross annual sales is also necessary, but this requirement appears to be only for business loans and doesn’t apply to equipment financing.
To start the official application process, merchants can click the “Apply Now” button on the National Funding website and fill in a longer form asking for:
Once this information has been submitted, someone from National Funding will get in touch to request additional documentation. The most common information for which the lender asks is a business Tax ID number, the applicant’s date of birth and some form of personal identification, such as a driver’s license. No collateral is required, and National Funding doesn’t appear to take out any liens for its equipment financing.
Although the average time to receive funding after all documents have been processed is 48 hours, some merchants may get cash deposited in their bank accounts in as little as 24 hours. Such a quick turnaround time is critical if a business is hoping to take advantage of a special pricing deal on equipment or needs to replace broken machinery as quickly as possible in order to continue operating.
National Funding doesn’t disclose rates for equipment financing on its website, but NerdWallet’s review of the lender states interest can range from 8 percent to the “high teens.” This can add a significant amount to the cost of a loan. Even at the lowest percentage, a loan of $100,000 would require $8,000 in interest payments. Companies qualifying at the high end could be charged $15,000 or more.
Finder.com puts the National Funding rates a little lower, between 4 and 8 percent. Because of this conflicting information, merchants may have to put in a full application to discover the rates for which they qualify.
National Funding offers some options to counter the high cost of its loans. Using the Section 179 deduction, merchants may be able to recoup a large chunk of their expenses come tax time. The lender also provides a lowest payment guarantee on equipment leasing. If its monthly payment quote isn’t the lowest a merchant can find for a comparable product with similar terms, National Funding will pay $1,000 toward “qualifying executed leases.”
Most alternative lenders prefer to maintain first- or second-position status, so even one existing loan or lien may prevent a business from qualifying. Carrying numerous loans at once increases the risk of a business missing payments or defaulting, so stacking is not often accepted by lenders. National Funding provides no information regarding its stance on stacking. Merchants with outstanding financial obligations should discuss the situation with the lender prior to applying.
Since equipment needs can change unexpectedly, it may be necessary for merchants to seek financing for additional equipment before paying off a current loan or lease. It’s unclear whether National Funding allows stacking of its own financial products in such circumstances.
No documentation fees are mentioned on the National Funding website.
Merchant Maverick reports the business loans from National Funding are subject to origination fees of 1 to 5 percent, but a rate of 1 to 3 percent is quoted by Finder.com. On a $100,000 loan, this could add $1,000 to $3,000 to the cost.
No clear information is available regarding National Funding’s renewal options. Equipment loans and leases aren’t generally structured in a way that allows for renewal, but merchants can inquire about obtaining funding for additional equipment before an existing loan is paid off. Improvements in the financial strength of the business may increase the likelihood of qualifying for subsequent loans.
National Funding offers early prepayment discounts on all its loan products. For equipment leasing and loans, merchants able to pay off the total remaining balance before the end of the terms receive a 6 percent discount. National Funding honors the discount at any point during the terms of the loan regardless of the size of the remaining balance. This allows companies with fluctuating cash flows to take out a loan for equipment when funds are low, pay off the balance when business picks up and save on the overall cost of funding.
Merchants have “virtually no limitations” on the type of equipment for which they can receive financing from National Funding. New and pre-owned equipment, electronics, furniture and machines are eligible if a business meets the application requirements.
Information on the amount merchants can borrow is conflicting. The National Funding website states the cap for equipment loans is $150,000, but according to Finder.com, loan amounts can be as much as $500,000 or up to 400 percent of the value of the equipment. No information is given on how to qualify for this amount or why the lender would consider extending extra funding.
Regardless of the size of the loan, businesses can use the money to upgrade existing equipment, replace broken equipment or make improvements to provide better service to customers and clients. For medical and dental offices, new equipment means better patient care. In office environments, new technologies can increase productivity. Companies using trucks, trailers and heavy machinery enjoy improved safety for their workers, and businesses of all types can use National Funding’s loans to invest in growth.
With over 800 reviews and a 5-star rating on TrustPilot, National Funding has more customer feedback than many alternative lenders. However, reviews are mixed on both TrustPilot and other platforms. Merchant Maverick gave the lender 3.5 stars in its review, and customer reviews on the BBB give it 3 stars.
Customers leaving National Funding glowing reviews praise the helpful representatives, good customer service and professional attitude. Many appreciate the fast application and approval process and the quick receipt of funds. Small businesses seeking financial assistance for growth say National Funding offered ongoing support throughout the lending process.
Negative reviews paint the lender in a different light. Dissatisfied customers report:
In some cases, National Funding has provided detailed responses to and apologies for unsatisfactory experiences. Other responses appear to be formulaic and don’t always address the customer’s concerns. Overall, the lender has more visibility than others offering equipment financing, but some of its tactics may be cause for concern.
National Funding has been a BBB accredited business since 2013 and was included in the Inc. 5000 list of fastest-growing companies locally and around the country from 2013 to 2017. The San Diego Business Journal also recognized the lender for its growth during these years.