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Friday, July 30th
LendingClub isn't the peer-to-peer platform it used to be (and the reason why "club" was in its name in the first place). Instead of relying on multiple lenders/investors to fund their borrowing requests, businesses can now take advantage of LendingClub's streamlined structure that is more like a regular bank.
Business loan requirements
You'll notice that there are two options there. If you're a new business, your loan would be structured as a personal loan. In that instance, you can expect to qualify for up to $40,000 and get a loan with APRs anywhere from 8.05% to 35.89% and a one-time origination fee of up to 6%. Your rates and terms will depend solely on your personal credit. That's a nice option to have, considering that some of LendingClub's competitors won't fund you at all unless you meet certain thresholds for annual profits and time in business. Personal loans through this institution are backed by WebBank, an "A+" rated and accredited company through the BBB.
On the other hand, if you've been in operation for at least a year and have annual sales of at least $50,000, you're eligible to apply for a business loan through LendingClub. They partner with Accion Opportunity Fund for all of their business lending.
Two different application processes
If you're applying for a personal loan through LendingClub, enter the requested loan amount (between $1000 and $40,000) and select the loan's purpose in the dropdown box, then "Check Your Rate" . LendingClub will try to verify your credit history based on your name, address, and birthdate. You'll be asked for your Social Security Number if they can't locate your credit report with the other details. If LendingClub is able to offer you a personal loan to use for your business, you'll see all of the rates and terms on the next page.
On the other hand, if you qualify to apply for a business loan, you'll start in the same way: entering the amount of loan you need (up to $500,000) and choosing the category that represents how you intend to use the funds (e.g. inventory purchase, marketing, remodeling). When you click on the "Get a Quote" button, you'll be redirected to the Opportunity Fund page - which, while carrying the LendingClub logo at the top, is no longer serviced by LendingClub itself.
Still being re-evaluated by the BBB
LendingClub is still under evaluation by the BBB: because the company underwent such a major overhaul, it takes time to establish any patterns of customer complaints and responses from the business. That's all normal and not a reflection of any trustworthiness issues. Plus, LendingClub had an "A" rating prior to their restructuring.
Different reputations of backing lenders
We want to keep an eye on the different ratings of the lenders that back LendingClub's business loans. While WebBank, the partner for the personal loans required for smaller, less established businesses, has an "A+" from the BBB, Accion Opportunity Fund has a much less reassuring "B-" rating. That's not a good sign, considering that LendingClub essentially hands you off to them from the very start.
Too many unanswered questions
While we like LendingClub in general and are really encouraged to see lots of positive customer feedback coming through after the company's restructuring, we just don't feel very confident about how they're approaching business loans at this time. It's great that they have an option for newer businesses, but there are competitors who offer funding that doesn't require the sky-high interest rates of a personal loan to do it. Plus, with no servicing coming from LendingClub on actual business loans - just a transfer to Accion Opportunity Fund - we think there are plenty of other lenders out there that are more straightforward. We recommend looking at a higher-ranked financial institution for your business loan.
With all the difficulties in today's economy, many people are choosing to open their own business instead of working for a traditional employer. Whether you're just starting your business, expanding your already-established business, or even hanging out a shingle as an online company, it's likely that at some point you'll need a business loan to successfully meet your customer's needs and your business goals.
In the past, small business owners relied heavily on traditional brick-and-mortar banks in order to finance their business loans. Often that meant that borrowers had to rely on their own reputation and relationship with their local bank. Getting the lowest possible interest rate was also more challenging, since there were few lending options from which to choose.
Fortunately, business owners today can choose among many lenders to find the best terms and interest rates available. In addition to the old local options, small business borrowers now have much more and better choices through various lenders on the Internet that specialize in small business loans.
There are many factors that you should consider before selecting a lender for your business loan. Some of these include:
TopConsumerReviews.com has reviewed and ranked the best Business Loan programs available today. We hope this information helps you find the best loan for your small business at an affordable rate!
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