FAQ

At Breakout Finance, we strive to enrich your understanding of the business financing process and help set you on the right path towards securing the capital you need. Having helped small businesses across the country secure more than $1 billion in funding, we've seen the same common questions come up regularly and wanted to use this opportunity to answer some of those questions.

Term Loans

As you evaluate small business funding options, you're likely to come across both terms. The interest rate only includes the interest percentage you will be charged for borrowing money. APR stands for annual percentage rate, and represents the annual cost of the loan expressed as a percentage over the term of the loan and includes all fees associated with the loan, as well as the frequency of the payments.
The cost of capital calculation is based on a range of criteria with the four biggest factors being industry, time in business, personal credit score and cash flow. For instance, a medical practice that has been in business for ten years and generates consistent annual sales with an owner credit score of 700, is much more likely to secure a lower cost of capital than a retail startup business (less than one year old) with monthly revenues that fluctuate.
Yes, we report to Experian Business bureau. This is not Experian Consumer bureau and the loan does not show up on the owner’s personal credit. We report both positive and negative information. Meaning, if payments are made as agreed, the bureau will reflect that positive outcome. Therefore, paying down your loan can help build business credit. Certain lenders only report to the business credit bureau when there is a negative outcome.
An origination fee, sometimes referred to as a closing fee, is a fee charged by a lender to cover the cost of processing and dispersing a loan. The fee is normally expressed as a percentage of the total loan amount (i.e., 2.5%), though it can also be a flat fee. The money is normally deducted from your capital before loan dispersal. As an example, if you have a $20,000 loan with an origination fee of 2.5%, the lender will normally deduct $500 before providing the remaining $19,500.
No, Breakout does not charge any penalty for paying off your business loan early. In fact, many customers who pay off early qualify for Breakout’s Early Repayment Discount. You must qualify by not missing any payments and by not stacking your loan or otherwise being in default under our loan with your business. If you would like to find out your early payoff amount, you can request this from Breakout at any time and we are happy to let you know whether your business qualifies and what your payoff balance would be.

Invoice Factoring

Invoice factoring is a program in which you sell us your invoices to accelerate the cash cycle from invoicing to payment. It is not a loan. We purchase your receivables at a discount and provide you an advance against the total value against your invoice. We then collect from your customer and remit you the difference.
A traditional bank line of credit is determined and impacted by the number of years in business, creditworthiness of the owner, cash flow and profitability of the business, amongst other things. Typically, our clients come to us when they are just starting out and growing because we are able to shift our credit analysis from our clients to their customers. This allows us to be more creative when coming up with a solution for you.
Typically, our clients factor their invoices with us because they are growing and their cash flow needs are growing as well. They are tired of not being able to get ahead. They are concerned about taking the next big order. Most of all, they are tired of being stressed when wondering when the next check will arrive. We help to alleviate that stress by helping your business make progress, without adding debt to the balance sheet.
Typically, the factoring fee (discount) is 1-3% of the invoice’s value. Another way of saying it is that you receive 97-99% of the invoice’s value. Unlike many other finance companies, we want to be as simple and upfront with the investment you are making as possible. This starts with our Pre-Approval Letter, in which we spell the structure out for you. It then continues to the financing agreements, where we put any and all fees that may ever be incurred on the first two pages, so that it is simple and easy to understand.
We can fund in as little as 4-5 business days, assuming you are able to provide us with the documentation we need quickly and that our corporate searches come back clear. We want to move as fast as you are able, so typically our speed of funding is limited by the speed that our client wants to move.