Read This Review Before Requesting A Lending Club Business Loan

Read This Review Before Requesting A Lending Club Business Loan
Amy Fontinelle
on July 18, 2017
Read in 5 min

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.

Funding Options APR Do you qualify? Time in Business Annual Revenue
Funding Option
Get Started
APR
5-50%
Estimated Apr
Do you qualify?
500
MIN CREDIT SCORE
Time in Business
At least 6 months
Annual Revenue
At least $100K
Funding Option
Learn More
APR
1.5% - 10%
Monthly Fee Rate
Do you qualify?
N/A
MIN CREDIT SCORE
Time in Business
At least 1 year
Annual Revenue
At least $50,000

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, and 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

Strapped for time?

Get started with our simple online form:

Getting a Small Business Loan - LendGenius

See Business Lenders

Amy Fontinelle Finance Journalist

Amy Fontinelle is a writer, editor, and personal finance expert.

Her articles have appeared at Investopedia, Bankrate, MassMutual.com, The Simple Dollar, Interest.com, Yahoo, Forbes.com, SFGate.com, Bankaholic, Mortgage-Calc.com, Saving Advice and other sites.

Amy’s clients include personal finance websites, financial institutions, public policy organizations, academic journals, and professional economists.

Small Business Loan BrokerSmall Business Loan Broker

Hiring a Business Loan Broker? Ask These 6 Questions First

Dustin Clendenen June 12, 2017
Small Business Funding - Debt Financing vs Equity Financing

Small Business Funding – Debt Financing vs Equity Financing

Rebecca Hosley April 22, 2017
Featured

7 Fast Business Loan Types for When You Need Funds Quickly

by Amy Fontinelle on April 18, 2018
Fast Business Loans - LendGenius
When your business faces a cash crunch and you need money ASAP, a quick search for fast business loans may be… Read more

5 Mistakes Small Business Owners Should Avoid

by Caitlyn Rose on February 17, 2016
5-mistakes-small-business-owners-should-avoid-lendgenius
Every small business owner wants to maximize profits over the long term. However, many business owners make mistakes every day… Read more
Recommended for Business Loans
Lendio
Headway Capital

Important Disclosures. Please Read Carefully.

Persons facing serious financial difficulties should consider other alternatives or should seek out professional financial advice. This website is not an offer to lend. Lendgenius.com is not a lender or lending partner and does not make loan or credit decisions. Lendgenius.com connects interested persons with a lender or lending partner from its network of approved lenders and lending partners. Lendgenius.com does not control and is not responsible for the actions or inactions of any lender or lending partner, is not an agent, representative or broker of any lender or lending partner, and does not endorse any lender or lending partner. Lendgenius.com receives compensation from its lenders and lending partners, often based on a ping-tree model similar to Google AdWords where the highest available bidder is connected to the consumer. Regardless, Lendgenius.com’s service is always free to you. This service is not available in all states. If you request to connect with a lender or lending partner in a particular state where such loans are prohibited, or in a location where Lendgenius.com does not have an available lender or lending partner, you will not be connected to a lender or lending partner. You are urged to read and understand the terms of any loan offered by any lender or lending partner, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you. By submitting your information via this website, you are authorizing Lendgenius.com and/or lenders and lending partners in its network or other intermediaries to do a credit check, which may include verifying your social security number, driver license number or other identification, and a review of your creditworthiness. Credit checks are usually performed by one of the major credit bureaus such as Experian, Equifax and Trans Union, but also may include alternative credit bureaus such as Teletrack, DP Bureau or others. You also authorize Lendgenius.com to share your information and credit history with its network of approved lenders and lending partners. For qualified consumers, our lenders offer loans with an Annual Percentage Rate (APR) of 35.99% and below. For qualified consumers, the maximum APR (including the interest rates plus fees and other costs) is 35.99%. All loans are subject to the lender’s approval based on its own unique underwriting criteria. Example: Loan Amount: $4,300.00, Annual Percentage Rate: 35.99%. Number of Monthly Payments: 30. Monthly Payment Amount: $219.36. Total Amount Payable: $6,581.78 Loans include a minimum repayment plan of 12 months and a maximum repayment plan of 30 months. In some cases, you may be given the option of obtaining a loan from a tribal lender. Tribal lenders are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender, please understand that the tribal lender’s rates and fees may be higher than state-licensed lenders. Additionally, tribal lenders may require you to agree to resolve any disputes in a tribal jurisdiction. You are urged to read and understand the terms of any loan offered by any lender, whether tribal or state-licensed, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Lender’s or Lending Partner’s Disclosure of Terms.

The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. Lendgenius.com has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.