It’s similar to companies offering point-of-sale loans to finance purchases (see our Affirm review for more info on purchase loans). However, instead of financing consumers, it provides microloans to vendors and other business clients when making a business purchase. While consumer sales typically require payment up front, business sales often run on payment cycles of Net 30, Net 60, or longer. This means you wait 30 or 60 days (or longer) after fulfilling the order before your customer pays. This is why small businesses (especially in the early years of the business) often rely on business financing and investment rounds to fulfill orders. Behalf hopes to bridge this gap by letting small businesses pay vendors up front for services, just like consumers do. The business then has 30 to 180 days to pay back the Behalf loan. In this Behalf review, we’re going to explore Behalf loans, learn how they work, and discuss the competition and alternatives.
Who Is Behalf?
Behalf is a New York-based financial tech company founded by Benjy and Shai Feinberg, along with Jeremy Esekow. The company began in 2011 and was originally called Zazma until late 2014. The company raised over $125 million from investors like Sequoia Capital, Spark Capital, Mission OG, Maverick Ventures, and Victory Park Capital. The business has an A rating with the Better Business Bureau. The company offers this short introduction video: In 2015, Behalf partnered with Comdata and Mastercard after the latter noticed it was competing in the space. Comdata is a payment processor and issuer of corporate spend cards, fleet fuel cards, trucking permits, and virtual payments. This partnership allowed the company to expand its offerings by allowing payments to any company that accepts Mastercard.Behalf offers business loans from $300 up to $50,000 with repayment terms up to 180 days. Payments can be scheduled either weekly or monthly, and they’re reported to business credit bureaus. Instead of taking a cash loan, the money goes directly to the vendor. Finances rates are 1 to 3 percent monthly (depending on individual credit), which translates to 21 to 61 percent APR.
How Do Behalf Loans Work?
On the Behalf website, you’ll fill out a free application with your full name, home address, business name, business address, and social security number. It then performs a soft credit pull, along with checking the company website and social media profiles to determine credit worthiness. Everything is done automatically, and you’ll receive approval within one minute. Behalf’s approval rate is about 40 percent, and, if approved, your vendors will receive the cash within three business days. There are no origination fees, maintenance fees, or application fees, and the monthly rate is fixed. Behalf loans are funded by FinWise Bank, and FDIC member bank based in Sandy, Utah.Behalf business loans can be used for any business purpose, such as buying inventory or paying rent and utilities, but the loan terms specifically prohibit using the money for personal purposes. This is similar to other business loan programs. Upon approval, it’s not necessary to spend the entire amount. It essentially acts as a line of credit. Once you start making payments on your Behalf loan, you’re eligible to take out another, although the total amount is limited to $50,000 (or whatever you were approved for), which makes it only useful for small businesses. Loans may be paid off early, although fees may apply if using a credit card. I’m unable to verify what those fees are despite contacting the company. A $20 fee applies for changing your repayment plan (i.e. to extend the payment period or schedule).
How Do I Accept Behalf Payments?
Because Behalf integrates with Mastercard, anyone who accepts Mastercard can accept Behalf payments. If you’re using Behalf to pay your vendors, simply apply as described above. However, if you want to let vendors know you offer Behalf financing to accept payments, there’s a separate application for Behalf Merchant Services. To accept Behalf, the standard 2 percent transaction fee applies as its processed over the MasterCard network.Disputes can be resolved by contacting the company. That said, I attempted to contact Behalf and received no response. Behalf did not return my phone call or email. Instead of a direct account manager, the provided email address is a general inbox, so reaching a single point of contact is impossible. In researching online, I found this problem to be consistent with other customers’ experiences, so be warned that ongoing customer service appears not as quick and easy as the initial application.
Should I Accept Behalf from Other Companies?
There doesn’t seem to be much benefit to joining Behalf Merchant Services to accept Behalf payments. All you’re essentially doing is promoting their company to your clients without receiving any referral bonus. Should one of your clients choose to pay you as a vendor using Behalf, you only need to accept Mastercard. Invoicing clients and recommending a specific lender for them to pay it are very different things, and your client’s experience with a company you recommend may color their perception of your business as well. If the client experiences a problem with Behalf after using them at your suggestion, it may negatively affect their opinion of your business. However, if they have a positive experience, it can reflect well on you. Just be sure to vet companies you recommend to your clients, and consider the pros and cons of making those recommendations.Behalf Alternatives
Although its structure differs, Behalf is substantially a small business loan. If you’re unable to pay a vendor using available funds or credit cards, be sure to shop around to find the best pricing for your individual situation. Here are some other funding providers to consider.Small Business Loans
Kabbage – Kabbage offers small business loans from $2,000 to $250,000 with a 24 to 99 percent APR. Repayment plans are offered from 6 to 12 months. To qualify, you'll need annual revenue of at least $50,000 and be in business for at least a year. It’s also necessary to have a business checking account or only payment platform (i.e. QuickBooks or PayPal). OnDeck – OnDeck offers small business loans from $5,000 to $500,000 with a 9 to 99 percent APR. It also offers a line of credit up to $100,000 with a 14 to 40 percent APR. Repayment plans range from 3 to 36 months for loans and 6 months for lines of credit. To qualify, you need to have annual revenue of at least $100,000, a personal credit score over 500, and be in business for at least a year. Check out our comparison of OnDeck vs. Kabbage for more details.Invoice Factoring
Bluevine – Bluevine offers invoice factoring from $20,000 to $5,000,000 with a 15 to 68 percent APR. It also offers a line of credit from $5,000 to $200,000 with an APR of 15 to 78 percent. Repayment plans are offered from 1 to 12 weeks for invoice factoring and 6 to 12 months for lines of credit. To qualify, you need to have annual revenue of at least $100,000, a personal credit score over 530, and be in business for at least 3 months. Fundbox – Fundbox offers small business loans and invoice financing from $100 to $100,000 with an APR of 15 to 59 percent with repayment plans up to 3 months. To qualify, you need to have at least $50,000 in annual revenue and be in business for at least 3 months.Working Capital
PayPal – PayPal Working Capital offers funds from $1,000 to $125,000 with a one-time fixed origination fee from 1 to 58 percent. Repayment plans are 18 months and PayPal automatically deducts payments from your PayPal transactions. To qualify, you need to have annual PayPal sales of at least $15,000, and loans are a maximum of 25 percent of your sales. In addition, many payment processors partner with companies that offer working capital, also known as merchant cash advances. You can check with your processor for their recommendations. However, be aware that many merchant cash advance options are more expensive than small business loans. Between these loan services, you should be able to obtain financing to resolve any cash flow problems.Conclusion
Overall, Behalf is a great small business loan option that’s much cheaper than payday loans. By either using it yourself to pay vendors or offering it to clients who owe you on invoices, you’ll be able to free up capital to keep your business running.
Ben Dwyer
Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.
