Balboa Capital Review: Equipment Financing Specialist with Flexible Lease Terms

Balboa Capital Review: Equipment Financing Specialist with Flexible Lease Terms

Balboa Capital is a good for established business owners looking for quick equipment financing or term loans. The company offers sale-leaseback and wrap leases for equipment financing.
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Editor's Rating

3.5

Good for

  • Sale-leaseback and wrap lease equipment financing
  • Flexible loan terms

Bad for

  • Businesses with seasonal revenues
  • First-time borrowers
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Advertiser Disclosure

Advertiser Disclosure: Some of the offers that appear on this website are from companies which ValuePenguin receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The site does not review or include all companies or all available products.

Disclaimer: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone. For a full list of our advertisers, see our disclosure page.

Opinions, analyses, reviews, or recommendations expressed here are the author’s alone, and have not been reviewed or endorsed by the issuer. We may be compensated through the issuer’s Affiliate Program. For a full list of our advertisers, see our disclosure page.

Balboa Capital is a direct lender that specializes in short-term business loans and equipment financing. Balboa Capital is able to fund larger loans than most alternative lenders at rates comparable with major banks. On top of that, most loans are funded within a few business days, and in certain cases, funds can be received on the same day. We believe Balboa Capital offers a suitable solution for borrowers who can qualify for a bank loan but would like more flexibility in their borrowing terms.

Balboa Capital Review: Should You Apply?

Loans from Balboa Capital are good for businesses that need funds quickly but require more flexibility in their borrowing terms. Balboa Capital specializes in short-term business loans and equipment leases.

ProsCons
  • Competitive rates and flexible terms.
  • Good for established businesses with steady revenues.
  • Wide variety of equipment financing options.
  • Businesses with irregular revenue streams may have trouble being approved.
  • Daily and weekly repayment cycles for term loans may be cumbersome.
  • Stricter qualification thresholds than some online lenders.

The Pros of Balboa Capital

One of the things we liked about Balboa Capital was its flexibility. Balboa Capital approves loan amounts as high as $250,000 for term loans and up to $500,000 for equipment financing. A point worth mentioning is that you may be able to exceed those limits by calling Balboa Capital directly and providing additional documentation. This stands in stark contrast to other alternative lenders, who tend to adhere strictly to advertised lending limitations.

Balboa Capital also quoted us a wider range of annual percentage rates (APRs) than other online lenders, which indicates that Balboa Capital is willing to work with a larger scope of borrowers. APRs range from 3% to 30%. The lower end of that range is significantly lower than rates offered by most online lenders, and it's directly comparable to the rates offered by major banks. Balboa Capital is also willing to work with all credit scores above 560, which may help borrowers with shaky credit profiles qualify for funding. However, we caution our readers that having a lower credit score likely comes at the cost of getting a higher APR. Depending on your credit profile, the actual APR can exceed the stated 30% upper range.

The company does not require a personal guarantee for its term loans or equipment leases. These are required by most other alternative lenders as well as almost all major banks. Not requiring a personal guarantee will give some borrowers added peace of mind. Borrowers interested in Balboa Capital's term loans should note that the company requires a UCC-1 filing, which is a public disclosure that acts as a lien on the borrowing entity's assets.

One of Balboa Capital's main selling points is the variety of equipment financing options it offers. Balboa Capital offers sales-leaseback and wrap leases, which are unique offerings that we do not typically see from other lenders, in addition to more vanilla fair-market-value and dollar-buyout leases. Sale-leaseback is useful for business owners who own a significant amount of fixed assets but have trouble obtaining financing due to poor credit, and wrap leases can be useful for existing borrowers who anticipate future borrowing needs. The company also offers a special financing program for new businesses that have been operating for less than two years.

The Cons of Balboa Capital

We found that the qualifying thresholds for Balboa Capital's equipment loans are stricter than its counterparts. Balboa Capital requires businesses applying for equipment financing to have been in operation for at least three years. In our experience, we find that most online lenders require no more than two years in operation.

Businesses borrowing more than $75,000 need to demonstrate that they've been approved for comparable amounts in the past. Borrowers seeking to borrow more than $50,000 are also subject to mandatory site inspections. These hurdles may set a cap on the obtainable loan amount for many first-time borrowers. Finally, Balboa Capital evaluates businesses based on an MDS score, which is different from a FICO score. An MDS score rates an entity on its likelihood to default and is more commonly known as a "bankruptcy score." The lower your MDS score, the lower your likelihood of default. Credit companies provide a separate calculation of your MDS score to lenders.

We've included the minimum credit and operating qualifications for Balboa Capital's equipment loans in the table below.

Equipment Lease AmountMinimum FICOMinimum Age of BusinessMaximum MDS Score
$2,000 – $25,0006503 years690
$25,001 – $50,0006604 years680
$50,001 – $100,0006805 years660
$100,000 +7007 years660

Balboa Capital's term loans may not be the best choice for businesses with irregular or seasonal payment cycles. Most short-term loans provided by online lenders require daily or weekly payment cycles, and the high frequency of repayments may be burdensome to your cash flow. Before applying for one of Balboa Capital's term loans, it's important to verify that your business is sufficiently capitalized to weather any potential lulls in revenue.

Finally, a quick internet search revealed a higher-than-average number of customer complaints reported through the Better Business Bureau. Many of these complaints were due to issues encountered during loan servicing, fine-print surcharges or confusion regarding loan terms. While we're hopeful that the lender has since remedied these issues, we recommend borrowers exercise caution when obtaining a loan online. Always review all contract terms in detail—with the help of an attorney if necessary—to avoid any confusion later on.

Final Thoughts

Balboa Capital offers a wide array of equipment financing options and competitive rates for those who qualify; it's a good option for borrowers who seek business loans but require more flexibility in lending. Creative financing options like sales-leasebacks and new business program leases offer attractive financing solutions for capital-intensive and newly formed businesses. However, if your business has a less-than-stellar credit profile, it may be difficult to qualify for Balboa Capital's more lucrative offerings.

Eligibility Criteria

To qualify for Balboa Capital's term loans and equipment financing, your business will need to meet the requirements below. Keep in mind that meeting these requirements does not necessarily approve you for financing.

Term LoansEquipment Financing
  • Minimum personal credit score: 560
  • Minimum annual revenue: $100,000
  • Minimum time in business: 1 year
  • No current bankruptcies
  • At least 5 deposits per month
  • Less than 6 NSF/overdrafts per month
  • Less than 4 days of negative balances per month
  • Minimum personal credit score: 650 - 700
  • Minimum time in business: 3 - 7 years
  • Maximum MDS score: 660 - 690
  • Comparable debt required for loans of $75,000 or more
  • Site inspection required for loans of $50,000 or more

Balboa Capital Rates and Terms

Presently, Balboa Capital offers small-business term loans and equipment financing. These products differ by structure and repayment schedule.

For equipment financing, Balboa Capital offers both capital leases and operating leases. Leases can last for two to five years and have monthly or quarterly repayment schedules. The following types of equipment financing are offered:

  • Fair-market-value lease: An agreement to make a number of set payments. At the end of the lease term, you have the option to buy the equipment at fair value, refinance it or trade it in.
  • Dollar-buyout lease: This is similar to a standard loan, which requires higher monthly payments but allows you to purchase the equipment at the end of the contract for $1.
  • Sale-leaseback: This allows you to unlock the equity in your assets by selling your equipment to Balboa Capital. Balboa Capital will then agree to lease your equipment back to you for an agreed period of time. At the end of the contract, you may have the option to extend your lease or buy the equipment back.
  • Wrap lease: This is an add-on option that allows you to consolidate multiple loans with Balboa Capital in a way that fits your budget.
  • New business program lease: This is a special program that helps new businesses qualify for up to $15,000 in financing if they've been in operation for less than one year and up to $25,000 in financing if they've been in operation for less than two years.

Equipment Financing Features

Balboa Capital offers the following features for equipment financing.

Financing Amount Range$2,000 - $500,000
APR Range3.00% - 30.00% (APRs may be higher depending on borrower's qualifications)
Fees
  • Origination fee: 0-2%
  • Documentation fee: $100
Financing Terms2 - 5 years
Repayment OptionsMonthly or quarterly
Collateral RequiredYes
Personal Guarantee RequiredNo

Term Loan Features

Balboa Capital offers the following features for its term loans.

Loan Amount Range$2,000 - $250,000
APR Range3.00% - 30.00% (APRs may be higher depending on borrower's qualifications)
Fees
  • Origination fee: 0-2%
  • Documentation fee: $100
Loan Terms3 - 18 months
Repayment OptionsDaily or weekly
Collateral RequiredUCC-1 filing
Personal Guarantee RequiredNo

Application Process

Applying for a loan with Balboa Capital only takes a few minutes, and the entire process can be completed online. The initial application can be accessed from its webpage. They request some basic information about your business, including: name, address, contact information, years in operation, annual revenue and requested loan amount. If you're applying for equipment financing, you will also need to provide a brief description of the equipment you seek to finance.

Balboa Capital Corporation Reviews Complaints and Scam

Additionally, you will need to provide some personal information in either case, including your name, contact information, Social Security number and ownership stake. If your ownership stake is less than 80%, the remaining stakeholders will also need to provide their details.

If you seek more than $250,000 in funding, we recommend calling Balboa Capital directly, as you may be able to exceed Balboa Capital's stated loan limits with additional documentation.

In addition, your business will need to provide the following items to complete its application:

Term Loan

  • Three months' of bank statements.
  • Driver's license.
  • Voided check.
  • Proof of business ownership (typically a Form 1065, Schedule K-1).
  • Bank verification.
  • Year-to-date profit and loss statement (required for loan amounts over $150,000).
  • Balance sheet (required for loan amounts over $150,000).
  • Tax return (required for loan amounts over $100,000).

Equipment Financing

  • All of the standard documents required for term loans (listed above).
  • Equipment vendor invoice.
  • Verbal authorization to release funds to vendor.

Once you've submitted your information, Balboa Capital's automated systems will do a hard pull on your credit report and evaluate your application based on publicly available information, the details you provided, and your personal and business credit history. If you're preapproved, Balboa's loan officers will then contact you to complete the process. Depending on your credit score, certain loans may require a site inspection or evidence of comparable debt.

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