Lending Club small business loans are peer-funded loans since it is a peer-to-peer marketplace which lets borrowers take out loans or access lines of credit. Lending Club operates in all stats of the U.S. except Iowa. It is a great alternative for those who have been rejected by other banks and financial institutions. However, the business has to have at least been operating for two years to qualify for the loan. The minimum annual revenue requirement is lax and should only be $75,000. Like all other lenders Lending Club small business loans offer a very low APR to those with a good credit score.
Who Should Apply for the Lending Club Small Business Loan
These loans are specifically designed for businesses with an above average credit score who need access to quick cash. The loaned amount can be up to $300,000 with a five year repayment period. The APR offered by Lending Club varies from around 7.77% up to 35.11%. The upper limit shows an APR higher than most lenders but when compared to online lenders which can charge an interest of up to 90%, they are very low.
The business should have a non-objectionable two year credit history with no recent bankruptcies or liens. Other general requirements such as the borrower being an American citizen and 18 years of age with 20% shares in the business are also applicable here. Even though there is no specific credit score requirement, it is preferred that the owner has a credit score of at least 620 but even without that the business can qualify based on a strong sales record. There is a personal guarantee required for any loan above $100,000.
Lending Club business loans are best for those who can make earlier payments. Borrowers can actually save money on the loan interest payment if they are able to pay back earlier than expected since there is no prepayment penalty.
There might be no prepayment penalty but there are some other fees that come with the Lending Club small business loans. An origination fee of 0.99 to 6.99% of the loan is deducted from funds before they are transferred to your account. A $15 fine is also charged on unsuccessful payments or bounced checks. For late payments, the borrower will have to pay either $15 or 10% of the payment, whichever amount is larger.