Kapitus is one of the highest rated financing companies for small businesses. They offer small businesses several services, including business loans and merchant cash advances (MCAs).
In this article, we’ll focus on Kapitus’ merchant cash advance product, which they refer to as revenue-based financing. We’ll give a thorough overview of Kapitus, show you the pros and cons of their MCA products and services, and help you determine if you want to apply for a loan with Kapitus.
Kapitus Overview
Kapitus was founded in 2006, just before the Great Recession. Their initial focus was on providing small businesses with financing to stay afloat, since many major banks implemented much tighter requirements on lending requirements, which made it difficult—if not impossible—for small businesses to access financing.
Since then, Kapitus has grown its product offerings, specifically, MCAs. As an alternative lender, it shares a space in the fintech world with other companies like OnDeck and Fundbox. Though perhaps less well known than these alternative lenders, Kapitus serves over 25,000 small businesses with over $5 billion in financing.
Am I a Good Candidate for a Kapitus MCA?
Here are the criteria you must meet to be a candidate for a Kapitus MCA:
- In business for at least 2 years
- $250,000 in annual revenue
- FICO score of at least 630
- Do business in the United States
- No outstanding loans from anyone else (i.e., no stacking)
Comparing Kapitus to Other MCAs
Kapitus offers strong MCA products and services for small businesses. If you’re new to the concept of MCAs, check out our article on how MCAs work and when to use them.
First, let’s compare some numbers: How does Kapitus compare to a generic MCA provider?
| Amount Financed | Payment Terms | Funding Time | |
|---|---|---|---|
| Kapitus | Up to $5 Million | Daily, Weekly, or Monthly | As Few as 24 Hours |
| Generic MCA Provider | $5,000–$500,000 | Daily | 48–72 Hours |
Compared to a generic MCA provider, Kapitus offers a higher cap on financing, more flexible payment terms, and faster access to funds.
Kapitus also offers customizable plans that fit the needs of different small businesses. For example, while most MCA providers expect daily payments, Kapitus allows for weekly or even monthly payments.
Additionally, Kapitus scores highly across several different review sites, such as Google (4.9/5) and Trustpilot (4.8/5). We’ll go into more detail on positive and negative reviews a little later in this article.
Cons of a Kapitus Merchant Cash Advance
Compared to a generic MCA provider, Kapitus does have a few downsides. Let’s again compare Kapitus to a generic MCA provider:
| Time in Business | Minimum Revenue | Credit Score | Finance Stacking Allowed | |
|---|---|---|---|---|
| Kapitus | 2 years | $250,000 annually | 630+ | No |
| Generic MCA Provider | Not typical | Not typical | Not typical | Potentially |
Kapitus MCAs are simply not an option for brand-new small businesses, businesses produce less than $250,000 in annual revenue, or business owners with poor personal credit.
Additionally, as with all MCAs, you need to consider the consequences of how repayment works. We wrote a comprehensive article about MCA repayment, but here are a few highlights to consider:
- You’ll likely pay a holdback, which is a fixed percentage of future credit/debit sales that the MCA provider will collect directly from your business account to repay the MCA.
- You’ll be assigned a factor rate, which is a multiplier that determines how much you’ll need to pay back to access an MCA. As a simple example, if you borrow $10,000 at a factor rate of 1.5, you’ll end up paying $15,000 total to pay off the MCA.
Kapitus also collects several fees on its MCAs, some that depend on how much you request.
- If you request $15,000 or less, you pay a $395 origination fee.
- If you request more than $15,000, you pay a 2.5% origination fee.
In short, Kapitus MCAs may not be a solution if you’re looking to get your business up and running, or if you already have financing through another company. However, if your business is established and you aren’t stacking your financing, a Kapitus MCA may offer you strong benefits.
What Can I Use a Kapitus MCA for?
An overall benefit of an MCA is that there aren’t many limits on how you can use your funds. This is different from traditional lending, which usually has stricter requirements for how you can use the funds you receive.
There are several business functions that Kapitus suggests you can use an MCA for:
- Equipment/operational improvements
- To pay temporary employees for urgent projects
- Marketing costs
- Business expansion
The first three bullets are good ways for small businesses to leverage an MCA. Here are a few examples of why:
- A critical piece of equipment breaks down, and you need to fix it immediately. You may not have the funds to do it, and a traditional loan might take more time than you can afford. An MCA could help get the equipment up and running so you can continue to run your business.
- An MCA can give you funds to pay temporary employees and take advantage of increased demand.
- Marketing is a crucial but often expensive part of growing your business. An MCA could help you overcome the upfront costs of quality marketing, allowing you to market now and use the additional funds of successful marketing to both grow and pay the MCA back.
However, we advise caution with the idea that an MCA can be a solution for business expansion overall. Simply, an MCA isn’t a long-term financial strategy. The financing terms tend to be too short and the cost of the financing to expensive to realistically fund larger business expansion.
For example, using an MCA to fund a move to a larger space may be tempting, but it may also position you in a debt spiral, due to higher costs for rent, utilities, and other ongoing costs that an MCA may not be able to realistically support.
How Does a Kapitus MCA Work?
Applying for a Kapitus MCA is easy. If you have all the information required ready, it could take as few as 10 minutes.
Step 1: Fill out an online application
Their online application includes the following business information:
- The Amount You’re Requesting and Reason for Requesting
- Legal Business Name and “Does Business As” (DBA) Name
- Business Address, Website, and Phone Number
- Tax ID
- Annual Revenue
- Entity Type (e.g., C Corp, LLP, Sole Proprietorship)
- Industry Type
- Business Start Date
You’ll also need to provide personal information, like your name, credit score, social security number, and address.
Step 2: Upload financial documents
You’ll need to upload three months of financial documents for review.
Step 3: Finalize agreement
If you’re eligible for an MCA, Kapitus will match you with one of their financing specialists, who will walk you through up to six different financing options, including repayment terms. Once you find the one you like, you finalize your agreement and could see the requested funds in your account within 24 hours.
Step 4: Pay back
As with all MCAs, repayment begins almost immediately. Kapitus does offer daily, weekly, and monthly repayment methods, so be sure to clarify which is best for you.
Remember: MCA repayment comes directly from credit/debit card sales. So, you MUST accept these kinds of payments to qualify for an MCA.
Remember 2: MCAs use holdbacks, factor rates, and credit/debit sales to determine how much you owe them during a given repayment period. Read our article for more information about what holdbacks and factor rates are, and how they might affect you before you agree to anything!
Kapitus Customer Service and Support: Very Positive
Kapitus has a straightforward, intuitive website that makes finding information and solutions easy. Once you’ve been approved for an MCA, you can access their online portal to review your agreement, funds, and other important information.
However, Kapitus does not have a dedicated mobile app as of this writing.
Fortunately, Kapitus’ customer service reviews are overwhelmingly positive. Clients often cite speed, friendliness, and patience as traits of the financial specialists they work with at Kapitus. Kapitus is also active in responding to reviews, which is a sign that they actively work to improve customer experiences.
Complaints About Kapitus
Complaints about Kapitus are few and far between. There are two general threads that run through the rare complaint about Kapitus.
1. UCC liens and fees
The most common complaint about Kapitus concerns UCC liens. A UCC lien is a tool that MCA providers use to protect against defaults and non-payments.
Basically, a UCC lien could give an MCA provider a right to seize assets if a business defaults on a repayment. In some cases, a UCC lien gives an MCA provider the right to collect directly from your ACH provider or even your customers directly, which could be devastating to your reputation.
Kapitus places a blanket UCC lien on all MCAs over $5,000. Some Kapitus customers complained that even after completing repayment, they still had a UCC lien on their business and that Kapitus required a $250 fee to remove it.
It’s important to note that not all MCA providers automatically terminate UCC liens upon final payment. You may need to request that they do so after you make your final payment.
Before you accept any MCAs, be sure to understand the process Kapitus uses to terminate UCC liens and whether there are fees to do so. If there are fees, make sure you ask why and whether they can waive them.
2. They Sold My Information
Another complaint is that customers felt that Kapitus sold their information to third-party vendors, who then tried to sell them other services. While this is indeed potentially annoying, Kapitus’ Terms of Use, Section 8, specifically states:
By your use of the Sites, such as, without limitation, through a submission of a request for commercial financing, you expressly consent to receiving servicing, collection, marketing, and other calls and messages, including auto-dialed and pre-recorded message calls, and SMS messages (including text messages) from us, our affiliates, our marketing partners, our trusted third-party providers, referral provides, and marketplace participants, at any telephone numbers that you have provided or may provide in the future (including any cellular telephone numbers). Your consent will be effective even if the number you have provided is registered on any state or federal Do-Not-Call (DNC) list.
However, if you do not want to be contacted for promotional or marketing purposes, you simply need to call (844) 547-9396 or email [email protected]. They’ll ask you which communications you want to opt out of.
It’s admittedly tedious—and in a perfect world you would have to opt in instead of opt out—but this complaint is one that’s easy to overcome.
What Else Does Kapitus Offer?
Kapitus is primarily an MCA provider. However, they have a financing network that provides access to additional services.
| Service | Kapitus | Kapitus Network |
|---|---|---|
| MCA / Revenue-Based Financing | ✓ | ✓ |
| Business Loans | ✓ | ✓ |
| SBA Loans | ✓ | |
| Equipment Financing | ✓ | |
| Lines of Credit | ✓ | |
| Invoice Factoring | ✓ | |
| Purchase-Order Financing | ✓ |
Conclusion: Kapitus Is a Strong MCA Choice
As an MCA provider, Kapitus is a strong solution for small business owners who have established themselves over at least two years.
Kapitus offers quick MCA financing options for business owners with fair credit and above, giving them access to money they may need immediately to cover unexpected costs, providing staffing for peak seasons, and support short-term marketing efforts.
Kapitus’ stated mission is “to help small business owners grow their organizations by providing tailored, transparent, and ethical financing solutions.” Based on their high review scores, minimal complaints, and performance in the direct lending space (which has far fewer regulations and oversight than traditional lenders), Kapitus has delivered on its mission since 2006.
As traditional lending continues to remain costly, MCAs offer small businesses an alternative strategy to access much-needed funds for short-term financing needs. Kapitus offers straightforward products and services for qualified small businesses to support their financial needs and business goals.
