Reliant Funding merchant cash advance review

About Reliant Funding

Reliant Funding, (Reliant) is one of the longest standing members of the Merchant Cash Advance (MCA) industry. The company also offers various other types of business financing, including small business loans, equipment financing, and other loans to industries such as retail, restaurant, healthcare, auto repair, and franchise.

Based in San Diego, CA, Reliant has been around since 2008 and has provided over $1.5 billion in financing to small and mid-sized businesses. The company’s claim is that they are passionate about connecting with small businesses and helping them expand by providing them with affordable funding that may not be available to them through traditional channels.

What are the benefits of an MCA from Reliant?

Simple application process and fast approvals

Reliant’s application process begins online with questions about the business’s contact information, age, and annual revenue. Often within hours you will receive a quote from a personal funding specialist, whom you can contact for additional details. In order to finalize the agreement, you will be asked to provide banks statements to verify the business’s financial information. Reliant will most likely also run a personal credit check on you.

If you are satisfied with the offer and the terms, funding is typically delivered directly the next day. (It is always a good idea to read the documents completely and in great detail, preferably with the help of your attorney, to be sure you are not agreeing to anything you may not be able to live with later.)

Low personal credit score not a barrier

MCAs are made based on the business’s ability to make payments out of future credit card sales, so the approval process is not specifically tied to the owner’s personal credit score. Reliant can thus fund a business that has a solid history of credit card sales, even if the owner has a very low credit score. As a result, an MCA may be a good option for a business owner with a low credit score, which often disqualifies them from more traditional types of financing. (Note that if the business has an open bankruptcy, it is very unlikely to be approved for funding by Reliant.) Owners with better credit scores may qualify for more favorable terms, including larger funding amounts or smaller paybacks.

Funding for businesses with as little as six months of operations

Generally speaking, the longer a company’s operating history and the stronger its financials, the better Reliant’s offer will be. However, even companies in business for as little as six months can receive an MCA from Reliant, which also recommends that a business have at least $10,000 in monthly revenue in order to qualify.

Flexible and variable payments

For standard MCAs, Reliant takes a percentage of every credit card sale. Hence if sales are slow in a given period, the business pays less than it would in a period with normal sales. This variable payment method is designed to leave the business with more cash to cover its other needs than would be the case if the MCA required a fixed, regularly scheduled payment (as is the case with an ACH Merchant Cash Advance.) Reliant often structures the payments with a percent of credit card sales that will allow the MCA to be paid off in 6 to 12 months if the business’s sales are in line with historical averages. If sales are stronger than usual, a business can complete its payments ahead of this schedule. Conversely, if sales are slow the MCA could be paid back over a longer time frame.

No worry about late payments

Because Reliant takes the payments directly from the credit card processor at the point of sale, there is no action required of the business to make its payments. Hence there’s no worry that the owner might forget to make a payment and incur a late payment fee.

What are the downsides of an MCA from Reliant?

Lack of transparency about the process

In order to obtain any meaningful information about what you are even applying for, let alone what the critical funding terms might be, you have to initiate Reliant's application process. The company’s website has a lot of pop-ups and other distractions that seem designed to make the visitor forget about searching for the funding parameters and instead just begin the application process so Reliant can capture the owner’s name and contact information. It is not until later in the process that information is provided about such key funding parameters as: Factors, Length of Payback, Holdback Rate, etc.

While the final parameters contained in a funding offer are uniquely determined by each business’s specific characteristics, it can be somewhat frustrating not to be given some idea of what the ranges might be in order to determine if you want to begin the application process. This information would also make it easier for business owners to compare Reliant to other funding sources without first having to provide private information.

Who is a Reliant Funding MCA appropriate for?

• Business owners with less than stellar credit but strong sales numbers
• Businesses that do a significant percent of their sales via credit card
• Businesses that need immediate funds for new equipment, inventory, or working capital but are unable to qualify for more traditional types of financing
• Businesses that could qualify for traditional business financing but which need funds now and do not have the extensive time required to navigate the application and approval process, which can be very slow

Who is a Reliant Funding MCA not appropriate for?

• Businesses that have access to other, less costly types of financing
• Businesses with longer term funding needs, permitting them to endure the slower process of applying for and receiving standard business financing
• Businesses that do very little in credit card sales
• Businesses in industries deemed to be higher risk, like adult entertainment, gambling, cryptocurrency, nightclubs, etc., which are typically not eligible. Check with Reliant to see if your industry qualifies.

The basic financials of a Reliant Funding MCA

The basics of how an MCA works are rather straightforward:

• The MCA funding company advances the business a fixed amount of cash, in return for the business’s agreement to repay a larger amount over time;
• The MCA funder receives these payments by automatically taking a fixed percentage of every credit card transaction done by the business, until the total agreed-upon amount is paid.
• The exact numbers involved for any given MCA are, of course, a bit more nuanced. In order to have a better estimate of what the financial cost of an MCA is to the business, a deeper dive is required. We provide a more complete explanation here.

Reliant Funding does not list its rates and fees, so it is difficult to provide accurate ranges of the parameters for their MCAs. However, based on information that is available from other sources, some reasonable estimates may be:

Reliant Funding has some mixed reviews online, though it does have an A+ rating with the Better Business Bureau, with roughly 90 customer complaints on record. The company has a 4.7 out of 5 rating on Trustpilot.

Many of the company’s negative reviews stem from a promotional tactic they have used extensively. In direct mail campaigns Reliant often sends a fake credit card to business owners as an advertisement for their funding products. This has caused confusion and ultimately some anger for certain mail recipients. The Reliant Funding website also has a very prominent “activate your card” call to action, further adding to the confusion. This is all just a promotional tactic; Reliant Funding does not provide credit cards.

What regulatory protection do you have with Reliant Funding?

It is important to be aware that the merchant cash advance industry is an unregulated industry, meaning that many of the protections you would have in taking a business loan from a bank or other regulated financial institution do not exist. When it comes to MCAs, the motto must be “Caveat Emptor.” i.e., let the buyer beware.

First and foremost, in the world of regulated finance there are usury laws in each state that limit the amount of interest that can be charged on a loan. It is thus illegal for regulated financial institutions to charge astronomical (i.e., “usurious”) interest rates.

However, an MCA from Reliant or any other entity is not actually a loan, although it may resemble one to the untrained eye. It is this technicality that allows MCA funders to obtain payback amounts that equate to effective interest rates of well in excess of 100% per year. This situation is possible because an MCA is structured as a purchase of future receivables rather than a loan, and it is thus not subject to regulation. While many experts agree that it’s only a matter of time until the MCA industry is required to submit to some form of regulation, for the time being that is not the case.

Given that you will likely have little to no recourse if anything goes wrong, it is a good practice to read the fine print of any agreement you enter into with an MCA funding company – preferably with the help of an attorney. As with any financial agreement, before you sign anything you want to know exactly what you’re agreeing to and how much you’ll be paying overall.