Lending Club Business Loans Review

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  • Updated on:
Date Established
2006
Location
San Francisco, CA

Highlights

  • Business installment loans
  • Business lines of credit
  • Competitive interest rates
  • Monthly repayments
  • No prepayment penalties
  • Great customer service

Overview

Founded way back in 2006, Lending Club is credited as one of the first companies to kick off the alternative lending movement (non-bank financiers that offer fast, flexible products online). This lender originally offered only personal loans, but now offers business loans, business lines of credit, and auto refinancing in addition to their original service.

The following review covers Lending Club’s business loans and lines of credit. However, because personal loans can be used for entrepreneurial purposes as well, we’ve also written a review of Lending Club’s personal loans.

Lending Club offers business financing to relatively well-established businesses—you’ll need a minimum of two years in business, $75K in annual revenue, and at least fair personal credit to qualify for a business loan.

For merchants who do qualify, Lending Club offers compelling services. Lending Club’s installment loans are competitively priced in comparison to similar business lenders. The company’s lines of credit tend to carry lower interest rates than those of similar competitors but are a little more difficult to qualify for.

Regardless of the product you’re looking for, Lending Club offers a fast, easy application process and knowledgeable customer service.

Is this the right lender for you? Read on for the details!

Services Offered

Lending Club offers the following types of loans:

If you don’t qualify for a business loan from Lending Club, you may still be able to use one of their personal loans for business purposes.

Borrower Qualifications

To qualify for Lending Club’s business installment loans or lines of credit, here’s what you need:

Time in business:2 years
Personal credit score:640
Business revenue:$75K/year

In addition to the above requirements, you must own at least 20% of the business (which cannot have any recent bankruptcies or tax liens).

Terms and Fees

Here are the terms and fees for Lending Club’s business installment loans: 

Borrowing amount:$5K – $300K
Term length:1 – 5 years
Interest rate:5.9% – 25.9%
Origination fee:0.99% – 6.99%
APR range:8% – 32%
Collateral:Personal guarantee
Blanket lien on loans above $100K

Lending Club’s installment loans are dispersed in one lump sum and repaid via fixed monthly payments. Aside from interest, borrowers are charged a one-time origination fee which is deducted from the principal before the loan is sent to your account. If you need a specific amount of money, make sure to request a little extra to account for the origination fee.

Lending Club does not charge a prepayment penalty for repaying your loan before your term is up.

These are the terms and fees for Lending Club’s business line of credit: 

Credit line size:$5K – $300K
Draw term length:25 months
Interest rate:Prime rate + 2.75% – 18.35%
Draw fee:1% – 2%
APR range:7.2% – 23.9%
Collateral:Personal guarantee
Blanket lien on loans above $100K

This lender’s lines of credit function like standard revolving credit lines. You are given a credit facility of a certain amount and can borrow up to your limit at any time. As you repay your debt, you replenish your credit limit.

Lending Club’s lines of credit have a variable interest rate that fluctuates along with the WSJ’s prime rate, which means that your interest rate will change if the prime rate does. Additionally, the lender reevaluates your credit line every six months, which may have a positive or negative effect on your interest rate.

Otherwise, the only fee Lending Club charges (aside from late fees) is a draw fee whenever you request funds from your line; the draw fee is added to the borrowing amount. For example, if you request $20,000 from your line and have a draw fee of 2%, you will receive $20,000, but you will have to repay a total of $20,400 plus interest.

Application Process

Lending Club describes the application process for their business loans on their FAQ.

To check your rate, you’ll have to fill out a form online with information about yourself, your business, and your business’s finances. When complete, you’ll receive a quote detailing the amounts, term lengths, interest rates, and origination fees available to you. Typically, a longer term length means a higher interest rate but lower monthly payments. Conversely, a shorter term length means a lower interest rate but higher monthly payments.

You can use the information quoted to you to determine whether you want to continue the application process or not. If you choose to carry on, you must select which loan option best suits your needs.

Contrary to what a lot of customers believe, accepting a quote does not mean you’ve been officially approved for funding. Before that happens, you’ll have to gather and send in documents for verification. You might also get a verification phone call from a Lending Club representative in order to prove your identity.

When you’ve sent in all your documentation, an underwriter will look through your application. At this point, they will perform a hard pull on your credit, which will have an effect on your score. If all the information checks out, you’ll be officially approved.

If you’ve been approved for an installment loan, the money (minus the origination fee) will be sent to your bank account once your loan has been funded by investors. If you’ve been approved for a line of credit, you can start drawing from your line immediately.

The time from application to funding normally takes a week or two, but might take longer if there are complications confirming information.

Sales and Advertising Transparency

Lending Club is transparent and up-front regarding information about their loans. By the time you are ready to commit to the loan, you will have all of the necessary information to make an informed decision.

While some have complained that they were not aware of the origination fee (the only substantial fee assessed), I saw it addressed and disclosed numerous times throughout the application process. As of now, Lending Club does not charge any hidden or junk fees and is not at all deceptive about the few fees it charges.

Customer Service and Technical Support

Customer service is available via phone or email. Lending Club also maintains Facebook and Twitter accounts for quick, informal contact. Additionally, you’ll be able to find the answers to most basic questions via Lending Club’s FAQ.

The customer service for Lending Club’s business loan division is especially helpful because business owners are matched with a dedicated US-based “Client Adviser” (aka account representative). This person can walk you through the sales process, then help with your application and funding. If you hit a bump along the way, you can get in touch with same individual each time for support, instead of spinning the roulette wheel with standard customer support.

Negatives Reviews and Complaints

LendingClub Corporation currently has an A+ rating on the BBB website. There have been 218 complaints filed over the last three years. The BBB also shows 54 customer reviews (five neutral, 32 negative, and 17 positive). Here are the most common complaints about Lending Club’s business and personal loans:

  • Advanced Fee Scam: Numerous complaints and fraud accusations on the BBB state that Lending Club asked for an advance fee to secure a loan, and then never delivered on the loan. As we’ve discussed, Lending Club does not charge advance or application fees, so what’s the deal? In response to complaints, Lending Club states the following:

It appears that after a victim has applied for a loan online through an unaffiliated website, the victim’s loan request information is somehow obtained by the fraudsters. The fraudster then contacts the victim using the Lending Club name or a variation of Lending Club. They promise the victim that they can obtain a loan through Lending Club by paying an application fee. In some instances, the fraudsters return to the same victim multiple times requesting additional funds in exchange for securing a loan. Funds are usually transferred to the fraudsters through the use of a Green Dot or Vanilla Visa card (or similar device), companies with whom Lending Club has no relationship.

  • Origination fee: Aside from interest, the origination fee is the only major expense that comes with a Lending Club loan. The fee is well-advertised on the Lending Club site, and it appears numerous times throughout the application process. Note that, for Lending Club’s installment loans, the fee is deducted from the principal before the loan is issued. For example, if you borrow $50K, you will actually receive between $49,505 and $46,505, depending on the size of your origination fee.
  • Denial after preapproval: The word preapproval doesn’t mean what you might think. Just about anyone can get preapproved. This does not mean that your loan will definitely be funded, or that your application won’t be denied after more information is gathered.

Positive Reviews and Testimonials

LendingClub has published a number of customer testimonials on their website, all of which appear authentic. Reviewers have left positive reviews on other sites (such as the Better Business Bureau) as well, but most of those pertain to the personal loans.

Regardless, here’s what customers cited as positive aspects of Lending Club’s business loan services:

  • Easy application process
  • Fast time from application to funding
  • Competitive terms and fees
  • Knowledgeable client advisers

We’d like to hear from you, though! Have you applied for a Lending Club business loan or line of credit? What was your experience like? Leave a message in the comments!

Final Verdict

Lending Club’s business installment loans and lines of credit may be helpful to businesses of many different sizes. Overall, this lender is an honest loan provider with competitive terms and fees, good advertising transparency, and quality customer service. Despite the fact that there are a few (mistaken) complaints filed with the BBB, Lending Club is certainly not a ripoff or a scam.

As other lenders offer similar terms and fees to Lending Club, it may behoove you to make some comparisons before committing to a Lending Club loan, however. Interested in your other options? Check out a comparison of our favorite small business lenders or our full list of reviews.

Bianca Crouse

Bianca Crouse

Bianca is a writer from the Pacific Northwest. As a product of the digital age, she likes absorbing large amounts of information and figures she might as well pass it on. When not staring at a screen, she is probably foraging for food outside, playing board games, or harassing somebody with theories about that movie she just watched.
Bianca Crouse
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2 Comments

    Jeff Keeger

    How can you not mention the scandal enveloping LC?!

    https://www.valuepenguin.com/2016/06/lendingclub-scandal-its-time-take-closer-look-marketplace-lending

    This comment refers to an earlier version of this review and may be outdated.

    Bianca Crouse

    Hi Jeff,

    When we heard about the events occurring at Lending Club last May, we decided that it would not have an effect on our rating because we are reviewing Lending Club from a borrowing perspective, whereas the events that transpired were a problem on the investor end.

    This comment refers to an earlier version of this review and may be outdated.

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