Able Lending Review
- Crowdfunding lender
- Startup loans
- Installment loans
- Debt refinancing
- Minimal borrower qualifications
- Competitive rates and fees
- No prepayment penalty
- Friendly customer service
Able hands-down wins the prize for having the most unique loan products in the online lending space. There’s no contest. This lender, which the founders started after their other startup bit the dust, offers hybrid P2P installment loans and traditional installment loans to eligible merchants.
Able promises you, the merchant, that if you gather a portion of your loan from your family, friends, and fans (called backers), the lender will cover the rest. They operate on the theory that, if you’re getting money directly from the people around you, you’ll be more likely to repay the loan because, you know, peer pressure.
Or, in one of the co-founder’s words: “ability + willingness = repayment”. As a small business owner, you might not feel particularly obligated to repay some lender, but you are most certainly obligated to repay your dear old mother or that client who comes into your shop every week.
However, Able also offers non-peer backed loans to especially creditworthy borrowers. Additionally, if you are not currently eligible for a loan, you can use their platform to set up and structure a loan that is 100% funded by backers. Although your loan would be funded by your friends and family, Able’s system allows you to set up interest rates, and Able handles your monthly repayments. The lender charges a one-time origination fee for this service, but does not collect any interest.
Able’s unique structure means that overall their rates are lower than many comparable online lenders, and you have the opportunity to further lower your rate by recruiting backers. While lenders that offer similar loans typically have APRs that range from about 6% to 36%, Able’s APRs max out at about 25%. That said, your personal rates will vary by lender, so you may still want to make a few comparisons before choosing a service.
Able targets borrowers who have been in business at least a year, make a minimum of $100K annually, and have a personal credit score of 600 or above. These loans can be used for working capital, business growth, or debt refinancing. However, you don’t need to meet these qualifications to create a startup loan.
Does Able sound like the service for you? Read on for the details!
Here are the minimum requirements you need to meet to qualify for an Able loan:
|Time in business:||12 months|
These qualifications do not apply to Able’s startup loans.
Rates and Fees
These are the rates and fees for Able’s growth and refinance term loans:
|Borrowing amount:||$25K – $1M|
|Term length:||1 – 5 years|
|Interest:||8% – 23%|
|APR:||9% – 25%|
An Able loan partially backed by peers looks like this: you find backers to fund 10% – 50% of the loan, and Able will fund the rest. The amount of the loan that has to be contributed by your backers will vary depending on your situation and the strength of your business. According to the website, the lender will contribute anywhere from twice to ten times the amount of money that you’ve gathered from your backers.
You have to find between two and nine backers to fund your loan. Spouses and children do not count toward the minimum number of backers required. The minimum amount a backer can contribute is $1K, and they cannot contribute more than 50% of the backer portion of the loan. Backers can charge an interest rate of as low as 2% or as high as the interest set by Able.
Able also offers traditional, non-peer backed loans to eligible merchants. These are reserved for businesses with “strong credit history” and a “positive cash flow.”
The first step to getting a loan is to complete an application on Able’s website. You’ll have to fill out basic information about yourself and your business. Able will do a soft check on your credit, which won’t affect your credit score. At this point, the lender will let you know whether you’ve been approved to continue the application process or not.
If you’ve been pre-approved, the next step is to provide documentation about your business’s finances. Able’s underwriters will look over this information to make a decision about what rates and fees to offer you. Here is a rundown of the characteristics the underwriters take a look at. Be aware that Able will run a hard credit check at this time.
After you’ve submitted all documentation, somebody from Able should get back to you with a decision within 24 hours.
Assuming you choose to go ahead with the process, the next step is to gather backers. This step, obviously, can take the longest (if you haven’t already gotten your supporters lined up). Once you’ve done your share of the leg work, Able will disperse the full amount to you.
The time to funding typically takes somewhere between two and four weeks, largely depending on how long it takes you to find backers.
Sales and Advertising Transparency
Able’s website provides a fair amount of information that will help you understand their products. The customer service is similarly transparent and willing to share information without annoying sales practices.
Able is an avid supporter of the Small Business Borrower’s Bill of Rights, a list created by the Small Business Lending Coalition. The bill lays out the fundamental rights of business owners seeking financing. You can read the whole list via the link, but you won’t be surprised to learn that the first item on the list addresses transparency.
Customer Service and Technical Support
For those who aren’t quite ready to talk to a real person, Able has relatively in-depth FAQ’s on their website for each of their funding products.
Negative Reviews and Complaints
Perhaps it’s due to the un-Googleability of its name, or because Able has only been operating on a national scale for a short amount of time, but there are very few reviews of Able on the web, positive or negative.
The company has a profile on the Better Business Bureau with an A+ rating, but is not currently accredited. Otherwise, the lender does not have an active presence on any review sites.
Here are the few criticisms I’ve come across regarding this lender’s services:
- Backer contributions repaid last: Repayment goes like this: during the first 3/4 of repayment, everything you repay goes towards settling your debt with Able. During this time, your backers collect interest. However, they don’t start regaining capital until the last quarter of the loan term. If you default within the first 3/4 of the loan term, your backers will lose 100% of their investment. So, from a backer perspective, the loan carries a significant amount of risk compared to more traditional P2P lenders.
Able uses certain physical, managerial, and technical safeguards to preserve the integrity and security of your personal information. Able cannot, however, ensure or warrant the security of any information you transmit to Able, and you do so at your own risk. Once Able receives any information from you, it makes commercially reasonable efforts to ensure the security of its systems. However, this is not a guarantee that such information may not be accessed, disclosed, altered, or destroyed by breach of any of Able’s physical, technical, or managerial safeguards.
I’m not sure whether this is just Able being brutally honest, a poorly phrased clause, or what, but it’s certainly not a vote of confidence in favor of Able’s security.
It’s also worth noting that Able has been accused of being a scam. While Able certainly offers an odd financing product, and you should certainly not give your friends and family’s money to any old company, this service is not a scam. Able has been in operation for a few years now and has been covered by many media outlets including Entrepreneur, Buzzfeed, and, more recently, Crowdfund Insider.
Positive Reviews and Testimonials
Quite simply, merchants like the idea behind Able. Because this lender, a third party, provides a structure that includes a repayment schedule and interest, backers are more comfortable contributing money to a fledgling business. And once you’ve got the backers on board, Able is on board as well, with potentially lower interest rates than you’ll find elsewhere.
But we’d like to hear from merchants in a neutral setting! Have you done business with Able Lending? Was it a good experience or bad? Leave a message in the comments!
If you have friends, family, or other people in your life who want to contribute money to your business, Able is a fantastic way to leverage those funds to access even more money. Able has lower rates and fees in comparison to other lenders, transparent customer service, and a relatively easy funding process.
However, anybody who is interested in Able might want to take a look at some other lenders before settling, especially if you don’t want to invest time time and resources into gathering backers from your own life.