As a savvy entrepreneur looking for a Lending Club review, you might be getting ready to request a business loan.
It’s an exciting time – Just keep in mind that matter how well-run your small business is, you can’t be prepared for everything.
Robert Peterson, the owner of a successful California Bay Area business called The BBQ Boys, learned this lesson firsthand last winter when his customers experienced the rainiest season in more than 100 years.
To get through a season where the wet weather permitted far less catering business than usual, Peterson turned to Lending Club to borrow working capital.
Neither his local bank nor the alternative online lenders he spoke with could offer the financing he needed under conditions he was comfortable with.
He chose Lending Club not only because the company was willing to extend him a loan but also because of its professional reputation.
Could Lending Club be the right borrowing solution for your business, too?
Check out our Lending Club review below and borrow with confidence.
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Lending Club Review – Comparing Business Loans
Founded in 2007 and based in San Francisco, Lending Club has issued more than $26 billion in loans as of March 31, 2018.
Because Lending Club is online-only, it offers significant savings, especially to highly qualified borrowers.
The average interest rate for all loans is 13.81%, but rates can be as low as 6% for the businesses with the greatest financial strength.
After you apply and choose an offer, investors crowdfund your loan.
RELATED: LendingClub Has Personal Loans Too!
Those investors might range from individuals to large institutions.
They each earn money from the interest you pay, while Lending Club itself earns money from borrower and investor fees…
It makes you wonder, what’s in it for you?
Lending Club Review of Advantages
Quick Loans Online
Lending Club allows prospective borrowers to get a quote without dinging your credit score, even if you’re declined.
Because the entire application process is online, you’ll receive an offer (or a rejection) in minutes.
There are no lender visits to your business and you don’t have to submit a business plan or projections for loan approval.
US-Based Support
Each small business loan applicant gets their own US-based client advisor who is available by phone on weekdays from 6am to 5pm Pacific time.
If your loan is approved, funds are automatically deposited to your bank account.
No Collateral on Small Loans
Lending Club does not require collateral for loans or lines under $100K, and no appraisals or title insurance are required to secure funding either.
Flexible Borrowing
Loan interest is calculated in a way that favors borrowers, and businesses can sign up for optional automatic payments.
Your business can even have two open financing products through Lending Club at one time, with a maximum total available credit of $300,000.
An individual guarantor can have up to three Lending Club loans worth a maximum of $350,000, so you could have one business loan and two personal loans, or two business loans and one personal loan.
You could also have a combination of fixed-rate loans and access to a variable-rate line of credit.
But it’s not all sunshine and rainbows, is it?
Lending Club Review of Disadvantages
Rates Can Vary
Because your interest rate depends on:
- your credit score,
- loan amount,
- loan term,
- credit usage,
- history.
You might get a high rate if you look like a high-risk borrower in one or more of these categories.
In general, the lower your credit score, the larger your loan, the longer your term, and the higher your existing credit usage, the higher your interest rate will be – that’s true wherever you go, not just with Lending Club.
Required Personal Guarantee
While they don’t ask for personal collateral directly, Lending Club does require a blanket lien to guarantee the note which can leave you even more vulnerable.
Late payments or default will affect your personal credit score, and Lending Club can seize your company’s liquid assets such as inventory, cash, and accounts receivable if you don’t repay your loan.
Fund Time Varies
Lending Club says that it usually takes 7 days from application to funding, but it sometimes takes a little longer.
Depending on what other loan options you’re considering, this might seem fast (compared to a typical SBA loan.)
One Borrower to a Loan
Only one person can serve as a guarantor for a Lending Club loan.
If you have multiple business owners, they will not be able to share responsibility for the same loan.
However, if each owner can individually qualify, you can divide the loan amount among owners.
Loans aren’t available for financial investing, lending, gambling, adult businesses, or illegal activities, nor are they available for nonprofits, religious organizations, or political organizations.
Loans are also unavailable to businesses in Iowa, Guam, or Puerto Rico.
Lines of credit are subject to re-underwriting every 6 months, so you may have to submit documents showing your company’s current financial state as often as twice a year.
The terms of your credit line might change for better or for worse for future draws based on those documents.
And if you miss a payment, you will not be able to make further draws on your line of credit until you bring your account current.
Lending Club Review of Business Loan Types
Lending Club provides two types of small business financing:
Business loans & business lines of credit.
Below are the characteristics of each.
Business loan
- Amount: $5,000 to $300,000
- Interest rate: 5.9–25.9% fixed, based on credit and financial strength
- One-time origination fee: 0.99–6.99%, subtracted from loan proceeds
- Other fees: payment by check; late fee
- Total annualized interest rate: 7.77–35.11%
- Term: 1 to 5 years
- Payment frequency: monthly
- Prepayment penalty: none
Business line of credit
- Amount: $5,000 to $300,000
- Interest rate: 6.75– 22.35% variable, based on the Wall Street Journal prime rate plus a fixed amount or “spread” (prime plus 2.75–18.35%)
- Draw fee: 1–3% fixed
- Origination fee: $0
- Monthly fee: $0
- Annual fee: $0
- Term: 25 months per draw
- Prepayment penalty: none
Additional info: Request a draw online or by phone.
Draws are usually approved the same day, and money can be in your bank account within 3 to 5 business days.
Minimum Requirements for Lending Club Loans
Whether you take out a business loan or open a line of credit, you’ll need to meet these minimum requirements:
- Personal credit score of 600
- Two years or more in business. If you don’t meet this qualification, you can borrow up to $40,000 with a personal loan from Lending Club.
- At least $75,000 in annual sales
- No recent bankruptcies or tax liens
- Own at least 20% of your business
- Be at least 18 years of age
- Be a United States citizen or permanent resident, or living in the United States on a valid, long-term visa
- Have a valid bank account and email address
The Bottom Line
Lending Club loans are best for small businesses with at least a two-year history that want a simple application process and no hidden terms or fees (who doesn’t)?
All things considered, Lending Club is a legitimate lender to work with and if you’re 100% satisfied with their offer, you should go for it!
On the other hand, if you think your interest rate could be lower or you’d like to find better repayment terms, you owe it to yourself to shop around.
Some businesses might find lower interest rates from other sources, and if you need money ASAP, Lending Club’s financing might not come through in time.
If time is a factor for you, you can potentially find quick loans online elsewhere.
Before deciding on Lending Club, review your full range of options to ensure you have an idea of the fair market value of your business.
Alternative Lender Reviews
- 2020: Swift Capital Review
- 2020: CAN Capital Reviews
- 2020: SmartBiz Reviews
- 2020: Bond Street Review
- 2020: Kabbage Review
- 2020: Direct Capital Review
- 2020: BlueVine Review
- 2020: Fundation Review
- 2020: StreetShares Review
Compare to Other Lenders
| Funding Options | Est. APR | Max. Loan Amount | Min. Credit Score | |
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Funding Option  | Est. APR
| Max. Loan Amount
| Min. Credit Score
| Get Started |
Funding Option  | Est. APR
| Max. Loan Amount
| Min. Credit Score
| Get Started |
Funding Option  | Est. APR
| Max. Loan Amount
| Min. Credit Score
| Get Started |
Funding Option  | Est. APR
| Max. Loan Amount
| Min. Credit Score
| Get Started |
Funding Option  | Est. APR
| Max. Loan Amount
| Min. Credit Score
| Get Started |
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