Small Loan Lenders

by on Sun, Oct 27th Categories: articles (334 Views) 1 comments

LendingClub: The Modest Loan Lender

 

Over the past years, LendingClub has become one of the most promising destinations for online personal loans. LendingClub has helped introduce the concept of peer-to-peer marketplace lending. In this, the company matches borrowers with small loan lenders who are willing to fund the loans at lower interests.

 

This company is best suited to serve borrowers with responsible payment records, which helps establish financial histories. LendingClub has the most attractive interest rates on safe, fixed income investments, which are low interests, which are generally below 1%, But at the same time, LendingClub offers an excellent opportunity to get rocketing higher returns. You can get an average yield between 5.06% and 8.75%.

 

Overview

Overall, LendingClub is a decent option for small businesses that have good credit scores or organizations that need funds quickly. LendingClub helps offer business loans with lines of credit up to $300,000 with terms up to five years. With the data released in 2015, we saw that the average amount borrowed for small business loans was around $16,297.

 

APRs at LendingClub vary between 7.77% and 35.11%. Although the upper range of these rates are much higher than rates from traditional lenders, they tend to be lower when compared to the rates from other small loan lenders, where APRs can exceed 90% at times. Borrowers with good credit scores may be able to benefit from single-digit APRs.

 

What is the basic requirement?

To qualify for a loan, your business must be at least two years old, which earns annual revenue of $75,000 with no new tax liens or bankruptcies. The borrower must be a citizen of the U.S., who is at least 18 years old and personally owns more than 20% of the business.

 

While there is no need for a credit score yet, LendingClub prefers if at least one owner has a credit score of 620. There are some personal guarantees required, as well. If a random business must borrow over $100,000, that company will need some collateral.

 

Though a credit score is preferable, you can still qualify for a loan if your business is financially healthy and has substantial sales. If you are disciplined enough to make early payments, LendingClub is the right choice for you. Borrowers who can pay their loans early have an opportunity to save money on interest since LendingClub doesn’t charge prepayment penalties or interest after a loan has been repaid.

 

Pros

  1. You can stretch the loan for the repayment terms of three years and five years.

 

  1. : No hard credit inquiry is required to check rates, which comes in handy when there are different loan products involved. It allows you to shop around without affecting your credit score freely.

 

  1. LendingClub accepts a minimum credit score of 600. Though the interest rate might not be ideal with that kind of score, but it might be a good deal for small business borrowers with an acceptable credit who usually must settle for subprime offers.

 

Cons

Longer Wait: We all know that faster is better, especially when we need quick money for an emergency. LendingClub money usually takes about seven days to become available.

 

Origination Fee: After evaluating your credit risk, LendingClub provides you with an interest rate, but part of that is an origination fee, which cuts into your loan.

 

 

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comments

  • j
    Less profit on smaller loans. More often than not, small business owners are looking for smaller loan amounts. In fact, our average loan size at Fundera is $40,000. Other data shows that about 80% of small businesses want loans that are less than $500,000. But, it doesn’t make financial sense for banks to provide these smaller loans. Why? It costs banks just as much to underwrite a $1 million dollar loan as it does a $100,000 loan. Therefore, they can make way more money focusing on larger loans. At the end of the day, banks are businesses too.

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