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IOU Financial Review

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IOU Financial Review

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Phone Number
Date Established
Kennesaw, GA


  • Suited for small business
  • Relaxed credit score requirements
  • Transparent terms and fees


  • High origination fee
  • Some additional fees


IOU Financial is a short-term lender serving small, profitable businesses. The Georgia-based company has provided nearly $500 million worth of funding to businesses throughout the country since 2008. As a short-term lender, IOU’s processes are quick, its credit criteria lenient, and its rates expensive.

We like to caution prospective customers of these types of companies to go in well-armed with information. Most of the funders are above-board, but the terms they offer can be quite punishing for the unprepared (you’ll be making daily repayments). Take full stock of your options with our short-term funding comparison chart before you commit to anything.

As for IOU in particular, the company seems pretty decent as short-term, online funders go. They offer a lot of information on their site and are mostly transparent about their process. Perhaps most importantly, their rates aren’t completely off the charts. Be prepared, however, for some additional fees.

Services Offered

IOU Financial offers the following:

Borrower Qualifications

To qualify, 80 percent of your company’s ownership needs to sign personal guarantees. For example, if there are three owners, each owning 33 percent of the company, all three owners would have to sign. On the other hand, if there were five owners with a 20 percent stake each, only four would have to sign. You’ll also need to have made 10 or more deposits a month into your business bank account.

Additionally, you must meet these prerequisites:

RequirementMinimum requirement
Time In Business:12 months
Personal Credit Score:600
Business Revenue:$120,000 per year and $3,000 avg. daily balance over a 3-month period

Terms & Fees

IOU’s website errs on the side of transparency, which is always welcome when it comes to comparing financial products. Here’s what their terms look like:

RequirementMinimum requirement
Borrowing Amount:$5,000 – $300,000
Term Length:6, 9, 12, 15, or 18 months (minimum $80,000 for loans of 18 months)
Factor Rate:x1.15 – x1.31
Origination Fee:8.8% (see below for details)
APR:Learn more
Collateral:Personal guarantee

You’ll be able to derive most of the information above from IOU’s website. Short-term loans like those offered by IOU use a different system than what you might be used to. The loans use a combination of fixed fees and simple interest to calculate your payment. You can save on the latter by paying off your loan early, although you’ll still owe the fixed payment costs of your loan.

IOU reduces the flat fees if you agree to a shorter term. This has the effect of keeping IOU’s effective APRs within a relatively narrow (and fairly reasonable) band relative to other short-term funders, where triple-digit APRs aren’t unheard of.

If you want a closer look at how much money you can get at what cost, IOU’s loan calculator is a very useful tool. It doesn’t provide a factor rate per se, but you can figure that out simply by dividing the Loan Amount by the Total Payback.

You’ll be making a fixed daily debit via an automated clearing house (ACH). Be aware that the daily schedule can be pretty punishing for the unprepared. IOU offers a bit more flexibility for its $70K+ and $85K+ loan tiers, allowing borrowers to make weekly payments instead.

IOU is unusually transparent in the sense that they also reveal most of their fees. IOU charges:

  • An origination fee. However, unlike most of its competitors, IOU does not deduct this fee from the amount of money you receive from them initially. Instead, it’s built into your payback amount.
  • A $349 administration fee
  • Simple interest
  • Loan guarantee fee
  • Additional convenience fees for things like paying by check. These are generally avoidable.

All fees, other than the administrative fee, are built into the factor rate you’ll be quoted, including the origination fee, which means it won’t be deducted from amount of money deposited in your account. This can make it a little difficult to compare to other alternative lenders who have lower factor rates but deduct the origination fee from the amount deposited into your bank.

All IOU products are unsecured, so you won’t be putting up collateral in the traditional sense, but you do have to sign a personal guarantee.

Application Process

IOU advertises a “3-minute application” and the idea that you can be pre-approved in seconds, with funding in your pocket in as few as 5 to 8 hours in ideal circumstances. (The company reports that most loans close in 48 hours, however, usually due to applications missing required documents).

If you want the process to go as quickly as possible, you’ll want to have the following documents on hand when you submit:

  • 3 months of bank statements (6-12 month loans)
  • 6 months of bank statements and full tax returns (15-18 month loans)
  • Voided checks
  • Drivers license

You can begin your application online or give sales a call. Likewise, if you stick around the website long enough, you’ll be prompted to chat with an IOU representative over the site’s built-in messenger.

Note that IOU will do a soft pull on your credit.

Sales & Advertising Transparency

As I mentioned above, IOU does a pretty good job disclosing the terms of its loans, going so far as to offer a loan calculator to give you an in-depth look at what you’re signing up for.

The site’s resource page isn’t quite as useful, but if you’re willing to take a critical eye to some of the posts and guides that double as advertising, you can glean some useful information from them.

Customer Service & Technical Support

The IOU staff seems hit or miss with regards to knowledgeability, unfortunately. The reps manning the chat messenger weren’t able to answer too many questions. One gave me a number to call, but I wasn’t able to connect with the individual I was referred to. Most clients seem satisfied with their customer support, however.

Negative Reviews & Complaints

IOU has a healthy number of customer reviews floating around in the aether, the majority of which are positive. There are a number of negative reviews and complaints on file, however. Critiques include:

  • Results may vary: Consider the 24-hour funding cycle a best-case scenario. Some users reported that the process took over a week.
  • Expensive: Expect to pay a premium for short-term funding, a trait not unique to IOU.
  • Aggressive sales tactics: A number of complaints to the Better Business Bureau describe aggressive sales tactics.
  • Unclear terms: Some customers say they were caught off guard by changes to their account, which could result in complications like late charges.

Positive Reviews & Testimonials

Most customers had a satisfactory experience with IOU. The BBB rates IOU Financial at A+, with only four complaints on record. This funder also rates well on Trustpilot, with an 8.9 rating out of 10. Nice things said about the company include:

  • Professional: Users reported that you can expect IOU staff to do what they say they will, within a reasonable amount of time.
  • Fast: If you’re in need of money quickly, it’s hard to argue against the allure of 24-hour (hopefully) funding.
  • Semi-reasonable rates: Expensive though IOU is, their rates take into account faster payoffs, so they more closely resemble the logic of a traditional loan. They’re also subject to state caps on loans, which keeps their maximum factor rates in check somewhat.

Final Verdict

IOU is the rare short-term lender I don’t have too many reservations about. They’re transparent, their costs are only moderately outrageous and they have a healthy digital footprint. Merchants may also appreciate receiving the full amount they borrow rather than having their origination fees deducted from it. Just be aware that this makes IOU’s rates a little trickier to compare to most of its competitors. Would you still be better off getting a traditional loan with better rates? Absolutely. But if you’re going the short-term, non-traditional lending route, IOU seems like a perfectly reasonable choice.

Still, we encourage you to make sure you don’t qualify for a better deal. Here are some of our favorite providers of small business loans.

Chris Motola

Chris Motola

Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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