Lending Club Reviews
Advance Amount and Fees8.7/10
Service and Support8.7/10
- Ten-year track record with over $28 billion lent.
- 5-minute, online application process.
- Low interest rates (5.99%) for top business customers.
- Soft inquiries won’t lower credit score.
- No prepayment penalty on business loans.
- Personal loans are capped at $40,000.
- Low interest rates dependent on investor demand.
- Steep origination fees (up to 8.99%), mean APRs could be much higher than interest rates.
Lending Club Reviews
See above info for Lending Club reviews. If you are a current or former Lending Club customer, we’d like to hear from you. How was your experience? Are you a repeat user?
Headquartered in San Francisco, California, Lending Club is a fully online credit marketplace. By filling out just one simple, online application, borrowers receive funding offers (primarily personal loans) in 5 minutes. On Lending Club’s platform, both individual and business are matched with different lenders.
Typically, unsecured personal loans are funded by individual ‘investors’. These loan amounts are capped at $40,000 and are graded from A, B, C, D or E based on the borrowers creditworthiness. Grade A bundles have the highest credit ratings and the lowest yields for investors. Conversely, Grade E is much riskier loans but have rates of returns in the high 20% range. There previously were lower grades but those have been discontinued.1
Similar to Fundbox, Kabbage loans and Ondeck Capital, Lending Club is a financial technology company backed by institutional investors including venture capital, hedge funds and family offices. But Lending Club is also a P2P lending marketplace, competing with names like Prosper and SoFi (see our Prosper loan reviews and for a deeper comparison). These fintechs help facilitate quick business loans through the use of complex algorithms which can match a borrower and suitable lender in minutes.
Given the optimism in the small business sector, there are an increasing number of personal loans for business purposes coming from Lending Club’s clientele. One contributing factor is that there seems to be no way to vet the exact use of proceeds by the borrower, regardless of their indication.
Lending Club began offering business loans in 2014.2 Business owners start the process by entering information through the Lending Club platform. According to their website, their general requirements are:
· At least one year in business
· $50,000 in yearly revenues
· No recent bankruptcies
· No tax liens
· Own 20% or more of the business
Since many of the loans are funded by individual investors, especially personal loans being used for startup capital, there is a concern that disgruntled investors, could look elsewhere for returns with better risk/reward structures. On the flip side, since the lowest term length is 3 years, securing small business funding now might be advantageous in case the easy credit window starts to close.
How is Lending Club Different from Factoring Companies?
Lending Club is not a factoring company itself. Rather, it facilitates personal and online small business loans utilizing its technology platforms to match borrowers with appropriate creditors. Remember, traditional invoice factoring or small business factoring is an asset sale, not a loan.
Further, Lending Club funds small businesses in industries not covered by factors including car washes, consultants, retailers, freelancers and restaurants. Factoring companies tend to finance B2B operations with seasonal cash flow lapses or late-paying customers from the construction, staffing, manufacturing and transportation industries (specialized trucking factoring companies typically handle transportation businesses).
Lending Club Pros and Cons
In addition to the Lending Club reviews above, we reiterate the key pros and cons:
· Ten-year track record with over $28 billion lent.
· 5-minute, online application process.
· Low interest rates (5.99%) for top business customers.
· Soft inquiries won’t lower credit score.
· No prepayment penalty on business loans.
· Personal loans are capped at $40,000.
· Low interest rates dependent on investor demand.
· Steep origination fees (up to 8.99%), mean APRs could be much higher than interest rates.
For more information on Lending Club:
Who Uses Lending Club?
Where does their funding come from?
Do they offer specialty financing options?