QuickBooks Capital: Review and Complete Guide to Business Funding (2024)

QuickBooks Capital is a loan product for small businesses. Here’s how it works:

1. Make sure all records in your QuickBooks account are up-to-date. Once all your records are up to date, QuickBooks will share your data (with your consent) with its wide range of online lender partners to explore potential business loan options tailored to your needs.

2. Review available offers. Evaluate the personalized offers available to you through QuickBooks loan financing partners, comparing the repayment terms and conditions of each.

3. Choose an offer. Once you’ve compared your offers, take the next step toward securing funding by completing the application process with a QuickBooks business loan partner.

4. Funds are deposited on approval. Once your application for funding is approved, you’ll receive funds directly to your business bank account.

Not sure you qualify for QuickBooks working capital funding? Here are the requirements QuickBooks is looking for:

• Your business records in QuickBooks
• Personal and business credit history; minimum score of 620
• Transactions in your business bank accounts
• Revenue of at least $50,000 over the last 12 months
• At least 6 months of activity in your account
• Not located in Alaska (QuickBooks Capital loans aren’t offered there at this time.)

While business collateral isn’t required, QuickBooks bases the loan in part on a personal guarantee. This means you promise to personally pay back the loan if your business is unable to.

QuickBooks Capital rates vary based on your personal guarantee and business health, but range from 2.61% to 29.04%. APR is between 9.99% to 34%.

The first thing you’ll need to get started with QuickBooks Capital’s service is your login credentials, since you’ll be applying from your QuickBooks accounting software. You’ll also need:

• Basic business information (like phone number, address, and email)
• Business employer ID number or (in the U.S.) social security number
• Financial information, such as revenue and tax data
• Personal information and state-issued ID and supporting documents

The application takes just a few minutes, unlike complicated loan applications. To start the process, go to the Capital tab in your QuickBooks Online dashboard. From there, most of the application will be automatically filled in from information in your account. Check to ensure everything is accurate, add any missing details, and submit the application. The QuickBooks Capital team will follow up with any questions or request any additional documentation. You should get a response about whether you are approved for QuickBooks Financing, typically within a few business days.

If you’re approved, you can then choose your loan amount based on the amount you’re approved for. The money will be deposited into your business bank account shortly after that.

If you don’t want to take on the debt from having a QuickBooks Capital loan or don’t qualify for bank lines of credit, invoice funding (aka invoice financing) might make sense for your business. With invoice funding, a business owner sells unpaid invoices to a factoring company. The business owner receives cash for the unpaid invoice amount, usually less fees, ahead of the payment terms. The business owner’s customer, who is responsible for paying the invoice, instead pays the unpaid invoice amount to the factoring company according to the original payment terms. Invoice financing provides complete confidence knowing that your cash is secured by an expected invoice payment.

Cash flow is the top challenge for small business owners, often due to late payments and long payment terms their customers expect. If you want to speed up cash flow with quick access to funding, FundThrough can help – and it’s integrated with QuickBooks Online for a streamlined funding process. Here are a few common reasons small businesses use invoice funding to secure additional cash flow:

• Making payroll costs
• Buying new equipment
• Paying their own suppliers & operating expenses
• Hiring staff
• Fulfilling large orders or projects that drive growth

Some businesses might be hesitant to use factoring, as they’re worried about customer perception should they factor outstanding invoices. While factoring may be viewed negatively by some clients, it’s not always an indication of financial instability. Proactive business owners use factoring as a tool to optimize cash flow, streamline accounts receivable, and overcome temporary cash shortages while pursuing business growth opportunities. At FundThrough, we work closely with you and your customers, maintaining positive relationships and upholding your business’s reputation.

Additionally, there’s some confusion around accounting for factored receivables in your bookkeeping. Our comprehensive step-by-step guide makes it easy to learn how to accurately record business factoring transactions.

B2B lending is a type of business financing option where one business chooses to loan funds to another. In many ways, B2B lending services operate in much the same manner as a traditional bank loan, with similar loan terms and conditions. Often, B2B lenders aren’t the financial source making the loans themselves. Instead, they facilitate the funding process between small businesses and their lenders.

Because B2B business loans are term loans much like a bank, they also have many of the same requirements. While these requirements are often not as stringent as those seen with a bank, they do ask that businesses have high credit scores, established business histories with a minimum time in business, and a specific amount of annual revenue for access to a credit limit with the most competitive rates.

Working capital loans are a type of loan you can use specifically for your everyday operations, offered by a traditional financial institution. Short-term cash flow crunches are the most common reason businesses get these short-term loans, whether due to a growth spurt, a new project, or a gap in sales. They can take the form of term loans or cash flow loans with a fixed fee.

Drawbacks of working capital loans come in the form of high interest rates and a complex loan application process. As with any loan where collateral is minimized, direct lenders offset risk by applying high interest rates. These loans are often tied to personal credit scores (as well as your business credit score). It’s important to weigh the pros and cons when you’re considering cashflow finance for small business.