Pearl Capital Review

Pearl Capital Review

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Pearl Capital provides cash advances for small business owners. Advances are an alternative form of lending for those who have not been able to secure funding by more traditional means, such as a business loan.

However, advances can be an expensive way to borrow. If it’s one of your only remaining available options, Pearl Capital does have much more lenient minimum borrower requirements than the competition, increasing your odds of approval.

Any terms and factor rates listed below are accurate as of September 4th, 2019.

Pearl Capital: Should you apply?

Pearl Capital is an option for business owners, even relatively new ventures and those with a poor credit history. The company uses independent sales organizations (ISOs) to secure clients in exchange for a healthy commission, but you can avoid the commission structure and brokerage fees by applying directly through Pearl Capital. ISOs are brokers that provide credit card processing services to small businesses, connecting them to lenders as well.

Advances tend to have lenient requirements and quick time to approval — perhaps 30 minutes or less for Pearl Capital — but they may be more expensive than traditional loans. Pearl Capital’s offerings are no exception. However, if you’re a small business owner who cannot qualify for more traditional lending products, the minimum qualifications required for an advance from Pearl Capital may be to your advantage.

What does Pearl Capital offer?

Funding amounts$2,000-$1 million
Term lengths100 to 260 business days
Factor rates1.21 to 1.49
FeesBrokerage fees may apply when you go through an ISO

Pearl Capital describes its sole product as a merchant cash advance (MCA), but many small business owners may associate the term with an advance on future credit or debit card sales where payments fluctuate depending on sales. Pearl has a set daily repayment that is drafted from your bank account.

Like an MCA, Pearl’s advance uses factor rates to determine the cost of borrowing. It’s important to understand that a factor rate isn’t the same as the more familiar annual percentage rate on a traditional business loan. A factor rate is applied to the original amount of the loan or advance, not the remaining balance. Thus, you won’t save money by paying off the loan early, you’ll just be free of your obligation sooner. What makes advances so expensive is that the fast repayment terms often means small business owners take out an additional advance to cover the previous one, creating a cycle of debt.

Merchant cash advance vs. traditional business loan

To find the total amount you’ll be required to pay back, you would multiply the amount of the advance you’re borrowing by the factor rate. Pearl Capital’s factor rates range from 1.21 to 1.49. Say you borrowed $100,000 with a factor rate of 1.30. After you have made all of your payments, you’ll have paid $130,000 with $100,000 going directly towards the principal and $30,000 going to the lender: Pearl Capital.

This differs from taking out a more traditional installment loan, where your $100,000 principal might come with an interest rate of 9.00%. However, this interest is charged to whatever the remaining principal is every month, and amortized so that your monthly payments are equal. At the end of a 36-month loan with these rates, you’d have ended up repaying the $100,000 principal along with $14,480 in total interest.

Do you qualify for Pearl Capital?

Pearl Capital is extremely lenient, even when compared to other advance lenders. It has no minimum credit score requirements, and only requires your business to have been open for three months in order to qualify for a cash advance. Remember that this low barrier to entry is accompanied by an expensive pricing structure for the borrower.

Minimum personal credit scoreNone
Minimum annual revenue$12,000 per month
Minimum time in business3 months
Collateral requiredNone
Personal guaranteeNone

Some lenders won’t accept your application if you work in a certain industry; in contrast, Pearl Capital lists religious organizations as an example of one that they will. Pearl Capital also says it lends to commonly excluded industries, with the only exceptions being businesses in the fields of law, bail bonds, collections and cannabis. If you own a business in any other industry, the specific industry you work in will not prevent you from getting an advance.

How to apply for Pearl Capital

Before you apply with Pearl Capital, you should know that the higher your factor rate, the higher your ISO’s commission. If you’re not happy with your factor rate, it’s worth asking if your ISO can lower it. The broker likely will have room to do so; it will just lower their commission.

Alternatively, you can apply directly through Pearl Capital to avoid brokerage fees and possibly inflated factor rates by calling 347-899-4040. A customer service representative will connect you with someone who can get you an application directly by emailing you a link to get started. After a brief conversation, your sales representative will send you a link to your personal application. Along with basic personal and business information, you’ll need to provide:

  • A copy of your driver’s license
  • Bank login information
  • A voided check
  • Landlord verification

Your credit will be run when you apply for through Pearl Capital, but only a soft pull will be performed — That means that this credit pull will not affect your credit score.

If you are borrowing $35,000 or less, your application will be run through an automated system. This system will make a decision on your application in 30 minutes or less, and funding can be provided as quickly as the same day. If you are borrowing more, the application process is still quick, but will take more than half an hour as it will have to undergo manual underwriting.

Pearl Capital versus other comparable lenders

Pearl Capital vs. United Capital Source

If you have a little more time, you may qualify for a lower factor rate by going through United Capital Source, where factor rates start at 1.09 compared to Pearl Capital’s lowest rate of 1.21. You may also have longer to pay it back, as Pearl Capital’s longest term comes out to a little more than 8 months, while United Capital Source’s stretches to 18 months.

While Pearl Capital only offers one product — its advance — United Capital Source offers 10 different lending options. You’ll be able to find equipment financing, traditional small business loans, loans for women-owned businesses, loans for business owners with bad credit and, of course, MCAs.

The application process is longer with United Capital Source, though, so it can take up to 24 hours to get your application processed. If you are extended an offer, it can take an additional 1 to 2 days to receive funding. If you are borrowing less than $7,500, you will not qualify for an advance with United Capital Source, compared to Pearl Capital’s $2,000 minimum.

Pearl Capital vs. Rapid Finance

Rapid Finance has an application and approval process that is almost as quick as Pearl Capital’s — the application is processed in as little as a few hours and funding can be available the next day. It’s easier to start the application process, as well, if you prefer initiating your potential financial relationship online rather than calling in.

Rapid Finance’s funding range is smaller, however; it only lends amounts between $5,000 and $500,000 via MCAs, though it is possible to qualify for greater amounts through its small business loan program. In addition, Rapid Finance offers lines of credit, and it’s also a U.S. Small Business Administration lender. Its merchant cash advance factor rates are lower than Pearl Capital’s, at 1.09 to 1.49. Its repayment structure may be more beneficial to business owners who see seasonal fluctuations in sales; repayment is not a fixed amount per day, as is the case with Pearl Capital, but rather on a fixed percentage of your credit card sales.

Pearl Capital vs. Credibly

Credibly is another option for those who would benefit from a percentage-of-sales repayment structure, rather than a flat dollar amount daily. Like Rapid Finance, repayment is based on a percentage of your daily credit card sales. The maximum repayment period is 18 months.

Credibly’s MCA comes with a 2.5% fee. It requires a minimum credit score of 500, at least six months in business and minimum average monthly sales of $15,000. This compared to Pearl Capital’s lack of credit score requirements, three months in business requirement and minimum average monthly sales of $12,000.

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.