Libertas Funding Reviews - Financial Lender Pros & Cons
- Provides funding within 24 hours of approval
- Considers high-risk industries
- Uses a technology-driven process to determine the best loan structure
- Fairly new company with little social proof to back up their services
- Relatively short loan terms
- Rates are higher than those of similar lenders
Who should use Libertas Funding?
For small businesses requiring fast short-term funding or those operating in industries where reliable cash flow isn't guaranteed, a personalized, flexible loan from Libertas Funding may be the right solution.
Libertas Funding is a short-term "fast cash" loan provider offering "transparent, simple and flexible" financial products to small businesses. Founded in 2016, Libertas is still a new player on the scene. According to its Facebook page, the lender's "primary principle is integrity," and it takes a client-focused approach to provide superior service to merchants in need of loans and unable to wait through the long process required to obtain funding from traditional lenders.
The staff at Libertas Funding brings over 100 years of combined experience in funding and credit to the short-term lending industry. Using this expertise, they seek to understand the financial needs of each business applying for a loan and deliver the necessary finances with an appropriate fee and payment structure.
The Libertas Funding policy is to view businesses as unique entities and seek to provide funding without the need for applicants to let go of equity held in the company. Credit score is only one part of the approval process. With the goal of helping businesses "get things done" and "achieve strategic objectives," Libertas looks at the big picture while keeping qualification requirements simple.
Qualifying merchants can receive funding in as little as 24 hours of approval and are promised answers to online inquiries in "less than an hour," showing Libertas Funding has a commitment to promptness in business and communication.
To qualify for funding from Libertas, applicants must:
- Have a minimum FICO score of 600
- Have been in business for at least 6 months
- Show a minimum of 10 deposits per month totaling at least $12,500
- Maintain an average daily bank balance of more than $1,000
- Show fewer than 5 negative balance days per month
The Libertas Funding website doesn't make this information clear up front. Merchants seeking funding can only find out for sure if their business qualifies by completing the pre-qualification form and waiting for a response.
If a merchant is seeking cash from more than one lender, Libertas Funding may adjust its requirements to secure the client ahead of the competition. Current Libertas customers may request early renewals to receive additional funding without the need to take out new loans.
Libertas Funding services a range of industries in which the need for short-term financing is common:
Whether due to seasonal fluctuations in cash flow, changing supply costs or business models relying on customer volume, companies in these industries often require additional working capital to ensure operations continue without interruption. Libertas recognizes the unique needs of such companies and works to deliver the appropriate amount of funding with a payment structure tailored to each merchant.
Businesses in industries from which traditional lenders tend to shy away may be able to obtain a loan from Libertas Funding. These high-risk trades include trucking fleets and construction companies, both known for unstable cash flows. Application and approval requirements are higher for these industries, but if Libertas Funding has confidence in a merchant's ability to stay current on payments, they'll offer the same level of support they give to lower-risk businesses.
The following types of businesses are prohibited from obtaining loans from Libertas:
- Adult entertainment
- Law firms
- Travel agencies
Short-term loans provide fast cash but must also be paid back quickly. Libertas Funding gives merchants 3 to 12 months to pay off loan balances, which is shorter than many other lenders in the industry.
Short terms mean large payments, so it's essential for applicants to ensure their business budgets can support the expense. For results to be accurate when making calculations, both the factor rate and origination fee must be taken into account.
Payments for these types of loans are usually made on a daily or weekly basis, although Libertas Funding doesn't specify which structure it uses.
What's Required to Apply
Getting a loan from Libertas Funding starts with an online pre-approval application. Merchants are asked to provide:
- The applicant's name, email address and phone number
- Business name
- Business phone number and address
- Years in business
- Business industry
- The amount of funding requested
- General description of how the money will be used
After providing this information, applicants have the option of asking Libertas Funding to contact them to finalize the process or to complete the application online themselves. However, selecting the "complete online" option doesn't grant access to the full loan application. Information on how and when the application can be filled out isn't provided on the Libertas site, although it's likely the next step will be made available upon pre-approval.
To qualify for a loan and get full details on funding amounts, rates and terms, a merchant's full application must be accompanied by:
- The most recent 4 months of bank statements
- The 4 most recent processing statements
Libertas Funding relies on a "smart algorithm" to consider the needs of merchants, the use of the funding and the available budget available to each applicant for paying the loan back. Using the information provided with the full application, the lender determines the appropriate amount of funding to grant. Payment structure is also calculated at this time. It's important to note Libertas Funding requires all applicants to have at least 51 percent ownership in the company where the loan will be used.
Merchants meeting all qualification guidelines will receive funding within 24 hours of approval, which is faster than the norm among short-term lenders. Such quick turnaround time can be a boon in emergencies or situations involving time-sensitive investments.
Traditional lenders use interest rates to calculate fees associated with the use of funds granted. Short-term lenders like Libertas Funding use a factor rate instead, calculating all fees up front instead of charging a percentage on the decreasing principal over the life of the loan.
Rates on funding from Libertas are slightly higher than other lenders in the industry, ranging from 1.19 to 1.45. Depending on what rate is attached the loan, this means a merchant obtaining $50,000 in funding must pay back between $59,500 and $72,500 before the terms are up.
Because of the way factor rates affect total payments, merchants seeking short-term funding should always weigh the benefits against the consequences. Companies using short-term loans to make smart investments with the potential to bring in a great deal of extra income will likely be able to cover payments without difficulty. The same is true when stocking up on popular inventory before a high-volume shopping season. However, if the combination of the factor rate and origination fee lead to an overall loss, merchants should consider a different type of funding.
Taking out multiple loans from different lenders, a practice known as stacking, is generally frowned upon in the lending industry. Libertas Funding shares this sentiment and will automatically decline renewals for merchants attempting to layer competitor loans on top of working capital received from Libertas. However, in certain cases, the lender is willing to pay off competitor balances if merchants are prepared to net 50 percent of loan proceeds. Second-position loans may be considered for merchants with strong financial profiles.
Although stacking may be tempting for businesses in need of more money than a single fast-cash lender can give or when an initial loan is running out and there are still expenses to be covered, it's a dangerous practice with the potential to run companies into the ground. Merchants are better off discussing renewal or refinancing options with the current lender than going to a competitor for another loan.
No documentation or application fees are charged.
Libertas Funding charges merchants a 3 percent origination fee on all loans. Similar to commissions, origination fees cover the cost of application processing and serve as compensation for initiating and supporting the loan. The fee is calculated and deducted when funding is delivered, meaning merchants receive the full amount of the loan less 3 percent.
For example, the origination fee on a $25,000 loan would be $750, leaving $24,250 as the total loan amount. This $750 would be paid in addition to the amount added by the factor rate. If the factor rate on this loan was 1.3, the total cost of the loan with the origination fee would be $8,250, with $32,500 to be paid back over the course of the terms.
With its focus on providing necessary funding to merchants and helping small business owners reach their goals, Libertas Funding offers flexible renewal terms. The lender is interested in retaining customers and is willing to grant additional financing even when a client still has an outstanding advance. Renewals may be requested as soon as 30 percent of the initial loan is paid off.
However, although this process isn't the same as stacking and can be beneficial in certain cases, merchants must be discerning about budget and cash flow when considering renewal. Taking on additional debt means spending a longer time paying off advances and may lead to a cycle of continued borrowing with the potential to damage credit scores or hold back growth.
Libertas Funding calculates loan fees based on a factor rate instead of interest or APR and therefore doesn't offer interest forgiveness. The company does encourage early repayment and values open communication to ensure clients always have access to the funding they need and a payment structure they can afford.
Pre-approval from Libertas Funding requires applicants to specify what expenses the loan money will be used to cover. Unlike traditional lenders, however, the company puts no restrictions on business use of a loan. Merchants aren't required to provide detailed information or dedicate the loan to a single purpose within the business.
This policy gives small business owners the flexibility to put funds toward:
- Bridging seasonal gaps in cash flow
- Covering emergency expenses, such as replacing critical equipment or recovering from natural disasters
- Adding on to an existing location or opening a new location
- Buying necessary equipment or vehicles needed for expansion
- Hiring new staff members
- Covering payroll for existing employees
- Restocking inventory or obtaining bulk inventory at a discount
- Paying taxes
- Investing in new technology
- Developing and launching robust marketing campaigns
Because Libertas Funding aims to deliver cash in 24 hours, business owners can take advantage of these loans to cover any time-sensitive expense, including keeping their companies running when operations are threatened by changes in cash flow.
Libertas Funding has been accredited by the BBB since August 2017 and maintains an A rating. At the time of this writing, no complaints have been filed through the BBB website, and none of the company's clients have left reviews. Reviews are also lacking on Google and Yelp, and the lender does not yet have a profile on TrustPilot.
This absence of social proof makes it difficult to evaluate Libertas Funding based on the experiences of its customers. However, because the company is fairly new on the fast working capital scene, it may take some time for reviews to appear. Clients currently working with Libertas Funding can leave feedback to help others looking for loans make the decision as to whether this particular lender is right for their business needs.
Company Contacts Details
- (203) 717-0595
- Randy Saluck, CEO
- Joseph Viccora, associate director
- Jeffrey Eller, senior credit analyst
- Michael Thompson, senior credit analyst