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LendingClub Business Loans Review
The cliché phrase that it takes money to make money is quite accurate when it comes to building, growing and maintaining a small business. If you need capital and you’re looking for the best business loans, you may want to consider the financing options available through LendingClub. Financing is available up to half a million with no need for business plans, projections, site visits, appraisals or title insurance. Founded in 2006, the company has issued over $44 billion in LendingClub loans for individuals and businesses.
LendingClub at a glance
|Lender||Loan Amount||APR Range||Terms||Key Benefit|
|LendingClub||$5,000–$500,000||4.99%–24.90%||6 months–5 years||Minimal red tape for approval|
*Rates accurate as of October 2020.
What we like about it
LendingClub business loans cut out a lot of the red tape that you may run into when working with a big-box bank or more traditional lender. There’s no requirement to provide a business plan, calculate projections, explain spending or get an appraisal on collateral.
Sometimes speed and timing are critical to the success of your business. LendingClub business loans deliver multiple quotes in under five minutes and only require you to answer a few basic questions about your business. The eligibility requirements are laid out on the company website to further streamline the process.
Things to consider
If you’re a brand new startup without much of a track record, you won’t be able to get a LendingClub business finance loan. The company requires at least 12 months in business and a minimum of $50,000 in annual sales. While this is not out of the ordinary, it needs to be noted for startups looking for capital. Furthermore, LendingClub tacks on an origination fee, which is notable and may eat into your loan funds.
LendingClub only offers one type of unsecured small business loan. While this is no issue if you know what you need, other lenders offer additional options. These missing additional options include things like dedicated equipment financing, lines of credit, secured loans and SBA loans.
What you need to know
LendingClub business loans are available from $5,000 up to $500,000. Repayment terms can be as short as six months or as long as five years. LendingClub business loan rates span from 4.99% up to 24.90%. All repayment plans are fixed-interest with no variable rate options, but will include a 5.99% origination fee.
Additionally, LendingClub loans have no prepayment penalty, so you can return and repay the money as soon as you are done using it. For businesses, this flexibility is a must.
Applying for a LendingClub business loan can be completed online through the web portal or over the phone with a lending agent. The company does not have any brick-and-mortar branch locations, which helps to lower costs but may be a drawback to some that enjoy the in-person touch.
1. Complete the sign-up questionnaire online. The process takes less than five minutes and will get you several personalized rates and loan offers, as long as you meet the initial eligibility criteria. You will need basic information about your business, the amount you want to borrow and the purpose of your loan.
2. Select the business loan that best fits your needs. Once you complete step one, you’ll get several different lending options to choose from. Compare the options and choose the best fit for what you’re looking to accomplish.
3. Complete the final application. After you select your LendingClub business loan, it’s time to finish the final application. You will need proof of the basic business data you submitted in step one. During this step, the information will be confirmed to finalize your loan.
4. Receive your funding within a few days. Once your loan application has been completed, signed and accepted, your days away from funding. LendingClub will deliver the funds in a few day’s time to the account or method you selected.
Collateral and criteria
Business loans through LendingClub are unsecured and require no collateral to get. The company does not offer any forms of secured lending for businesses or personal loans. To qualify for a LendingClub business loan, your business needs to be in business for at least 12 months, bring in at least $50,000 in annual sales, have no recent bankruptcies or tax liens, you must own at least 20% of the business and your credit must be at least fair.
LendingClub vs. Bank of America
Bank of America small business financing offers a much more extensive array of lending products to choose from. Instead of just unsecured small business loans, you have access to commercial real estate loans, equipment loans, secured and unsecured lines of credit, secured business loans, health care practice loans and SBA loans.
Rates do seem to be competitive with most lending products starting in the low to mid 3s. Unsecured loans at Bank of America start around 4.75%, with amounts from $10,000 to $100,000. Repayment terms are 12–60 months, and the origination fee is a flat fee of $150.
LendingClub vs. Wells Fargo
Another small business funding option with a lot of flexibility is Wells Fargo. The bank offers unsecured personal loans, equipment loans, advancing term loans, lines of credit and commercial real estate financing. Unsecured loans, like the ones offered through LendingClub, come with no opening/origination fee, rates starting at 7.00%, amounts up to $100,000 and repayment terms out to 5 years.
If you need fast funding, this could be a great option as you can get your money as soon as the next business day. The bank also offers the FastFlex small business loan for smaller amounts (up to $35,000) with a 1-year term and weekly payments for shorter-term financing needs.