LendingClub: An In-Depth Look at the Small Business Loans on Offer

Starting a new business can be an exciting time, but there is plenty to consider from the outset.

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    Finance issues and how you will secure the funds you need to begin a venture are often the primary matters you need to address, but fortunately there are a host of different options out there for new organizations to consider.

    While many new firms may choose to go down the traditional banking route, a whole range of exciting new opportunities have emerged online in the last decade or so – and one of them is undoubtedly LendingClub.

    Established in 2007, the organization offers small business loans  alongside other forms of financial support including personal loans, medical financing and auto refinancing. But could it be the right option for you? While you may have already looked at a few LendingClub reviews, we think our examination of the website is one of the most comprehensive online today. So, sit back and see what we have to say about the benefits of joining the LendingClub.

    What Are LendingClub Loans?

    As we have already touched upon, LendingClub offers a range of different forms of financial support. However, our core focus throughout this article will fundamentally be on the services it provides for small businesses.

    It is difficult to define LendingClub loans as any one thing, as the company’s website makes it clear that it can provide support in all kinds of shapes and sizes. For example, small businesses like equipment financing, startup business loans or business acquisition loans are able to get loans up to $500,000 and can take up such financial support across terms running up to five years.

    I should take a moment here to explain that LendingClub operates on the basis of peer-to-peer lending. Under this model, borrowers are able to take out loans which are serviced and managed by LendingClub. Furthermore, others can then get involved in LendingClub investing by purchasing ‘notes’ – which are essentially a fraction of a loan – with the aim of earning a return on them.

    LendingClub’s work has been recognized on a number of occasions through the years, with it notably being named one of The World’s 50 Most Innovative Companies by the Fast Company media brand. In addition, it was named on the CNBC Disruptor 50 Class of 2014 list – an achievement which puts a spotlight on its efforts to revolutionize how individuals and businesses access financial support.

    How LendingClub Works

    We’ve already mentioned how a peer-to-peer model is fundamental to how LendingClub functions, so in this section we will look at how you can get started with accessing the vital funds you require to make your business a success.

    Anyone seeking a quote from LendingClub simply has to access its website, head to the LendingClub business loans section, input the amount they want to borrow and stipulate what it is for. From that point, you have to provide some personal details, answer a few questions and then you should be able to access a quote in just a few minutes. LendingClub states that small businesses can get all of their capital upfront, with fixed monthly payments and no prepayment penalties. 

    While the LendingClub website is straightforward to navigate, one minor issue is the lack of a LendingClub app specifically for borrowers. LendingClub Invest exists and has plenty of LendingClub investor reviews on services like Google Play but, as the name suggests, it is only for that audience.

    How do I Qualify?

    As you would expect with any small business loan provider, LendingClub does have some eligibility criteria which needs to be satisfied if financial support is going to be provided to an organization. 

    We found that the site states clearly that it is looking for businesses which have been in operation for 12 months or more, with the firms having a minimum of $50,000 in annual sales. Furthermore, it wants to see evidence of no recent bankruptcies or tax liens, while those applying for the support need to own at least a fifth of the business involved and also have a reasonable personal credit history. LendingClub adds that it does not need to see business plans or projections in order to check if a business is eligible, while it also does not require any business visits, appraisals or title insurance.

    LendingClub has proven to be a hit with a number of people, as the website features some LendingClub loan reviews where clients have spoken about their experiences with the organization and how it has supported their work. Among the key things raised in the testimonies is how competitive LendingClub rates are, as well as the quality of the customer service that it offers.

    Advantages and Disadvantages of a LendingClub Business Loan

    Looking at the pros and cons of a specific small business loan service is not straightforward, as ultimately it depends where your company may stand at any point in time. After all, something that might work really well for one business may not be of any relevance to another involved in a different sector or line of work.

    With that in mind, we have pulled together some general advantages and disadvantages that many businesses may be interested in.

    Advantages

    • First up, it is important to stress again how the quote process is very simple and means that businesses can quickly get an indication as to whether LendingClub can ultimately help them.
    • By the same token, LendingClub is transparent from the outset on its eligibility criteria so businesses can quickly assess what they would need to get help from the organization.
    • LendingClub outlines how its fixed rates can go as low as 4.99%, which would certainly make it a great option for many businesses. Of course, the site does stress that its best rates are available to borrowers with both good credit levels and financial strength.
    • The lack of prepayment penalties is a welcome one that businesses may want to take advantage of if they have an opportunity to.
    • The range of terms available for small business loans means that many organizations have flexibility in relation to the pace at which they pay back the support.
    • Each customer gets the benefit of a dedicated client advisor based in the US who is available through the working week to answer queries.

    Disadvantages

    • Some rates on loans can run high, so borrowers will want to take care to ensure that their final deal for a loan is affordable and ultimately beneficial.
    • The need to show at least $50,000 in annual sales may mean very small operations or those literally at the very start of their business journey may not yet be eligible for support.
    • Considering how so many of us use mobile apps in our daily lives, the lack of one specifically for LendingClub’s loan services is a shame.

    How do I Apply?

    As we’ve already touched upon, beginning the application process for a LendingClub small business loan is pretty straightforward. The core basics are:

    • Go to the LendingClub website and click Small Business Loans
    • Enter the amount you wish to borrow and the purpose of your loan into the relevant box
    • Click Get A Quote
    • Fill out the required information about yourself and your business
    • Submit your information and wait for your quote

    Documents Needed to Apply

    After you’ve provided personal details and information on your business, LendingClub requests some key figures related to your organization and some other matters. As such you should have the following details to hand:

    • Gross sales last year
    • Net profit last year (before tax)
    • Personal annual income
    • Average business bank balance
    • Information on your form of business ownership
    • Details of any monthly payments on loans, leases or rent

    LendingClub Loans for Bad Credit

    It is made fairly clear on the website that LendingClub business loans are only seemingly offered to those in a reasonable situation. After all, it stresses in the eligibility criteria that those applying need to have “at least fair or better personal credit”.

    Such detail seems to suggest that when it comes to LendingClub bad credit is not something that is massively tolerated. However, it may still be worth contacting the organization to see if there is a possibility that they could meet your needs and help you become a LendingClub business.

    Customer Support

    When it comes to customer support for small business loan services, LendingClub offers a pretty impressive selection of features. As I have already mentioned, many LendingClub reviews featured on their website make specific reference to this area and how the organization really thrives in it.

    Perhaps the most eye-catching part of LendingClub’s customer support is that borrowers benefit from being able to speak to a dedicated client advisor in the US if they have any questions about their loan or any other aspect of the service they are receiving. 

    Furthermore, the website also features a fairly comprehensive help section which should prove useful as you look to familiarize yourself with the service and gain answers to some key queries regarding how LendingClub functions.

    My Conclusion

    So, in conclusion, it is fair to say that LendingClub could well be a great option for any small businesses which meet its eligibility criteria. Joining the LendingClub could offer some big benefits, not least potentially low rates, no prepayment penalties and dedicated customer support every step of the way.

    LendingClub loans have made a difference to many businesses since the organization launched, while those involved in LendingClub investing have also enjoyed their own benefits too. If you have a small business and are seeking a funding boost, you could do a lot worse than considering it for your needs today.