LendingClub Business Loans Review
Note: Lending Club no longer originates business loans. Applicants who pre-qualify for a business loan via Lending Club are now connected to a partner lender. To find business lenders similar to Lending Club, take a look at our full list of small business loan reviews.
- Relaxed borrower qualifications
- Competitive terms and fees
- No prepayment penalty
- Time to funding is one to four weeks
- Excellent customer support
- At least fair credit required
- Potentially high origination fee
Founded way back in 2006, LendingClub is credited as one of the first companies to offer fast online loans. Although originally LendingClub only offered personal loans, over the years the lender has expanded its roster to include business loans and auto refinancing. This review covers LendingClub’s business loans; for a rundown on the company’s personal loans (which can be used for business purposes) head over to our LendingClub Personal Loans Review.
Currently, LendingClub offers business installment loans (the most common type of loan, in which borrowers receive a lump sum of money and repay in equal, periodic installments). If your business is at least 12 months old and makes at least $50,000 per year, you might be eligible for financing.
Is this the right loan for you? Keep reading to find out!
Table of Contents
LendingClub offers business installment loans. The company also offers personal loans and auto refinancing. If you don’t qualify for a business loan from LendingClub, you may still be able to use one of the company’s personal loans for business purposes.
To qualify for a LendingClub business loan, here’s what you’ll need:
|Time In Business:||12 months|
|Personal Credit Score:||Not specified|
|Business Revenue:||$50,000 per year|
In addition to the above requirements, you must be at least 18 years old, a citizen or long-term resident of the United States, and own at least 20% of the business. Your business also must not have any recent bankruptcies or tax liens. While there are no specific credit score requirements, borrowers must have “fair or better” personal credit to qualify.
Terms & Fees
Here are the terms and fees for LendingClub’s business installment loans:
|Borrowing Amount:||$5,000 – $300,000|
|Term Length:||one to five years|
|Interest Rate:||5.99% – 29.99%|
|Origination Fee:||1.99% – 8.99%|
|APR Range:||9.77% – 35.98%|
Blanket lien on loans above $100,000
LendingClub’s installment loans are dispersed in one lump sum and repaid via fixed monthly payments. Before you receive the funds, LendingClub will deduct a percentage, which is known as an origination fee. If you need a specific amount of money, make sure to request a little extra to account for the fee.
Although loan term lengths can range anywhere from one to five years, most borrowers will be offered a term length between one and three years. Your interest rate can range anywhere from 5.99% – 29.99%, depending on the strength of your business, your creditworthiness, your term length, and other factors.
Aside from the origination fee and potential late and NSF fees, LendingClub does not charge any extra fees. For example, you will not be charged application fees, maintenance fees, or prepayment penalties.
LendingClub describes the business loan application process in its 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, loans with a longer term length will have a higher interest rate but lower monthly payments. Conversely, loans with a shorter term length will have 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 some customers believe, accepting a quote does not mean you’ve been officially approved for funding. Before that happens, you’ll have to go through a to-do list, which includes verifying your email, linking your bank account, completing a 4506-T, and uploading business documents. LendingClub might ask for these documents:
- Business tax returns
- IRS 4506-T form
- Proof of personal income
- Proof of identity and address for you or your business
If you have these documents prepared ahead of time, you will be able to speed up the application process. When you’ve sent in all your documentation, an underwriter will look through your application and make the final decision about whether or not you’re approved for funding.
When approved, the money (minus the origination fee) will be sent to your bank account. The time from application to funding normally takes a week or two, but it might take longer if there are complications confirming information.
Sales & Advertising Transparency
LendingClub is transparent and up-front regarding information about its 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 disclosed numerous times on the website and FAQ. As of now, LendingClub does not charge any hidden or junk fees and is not at all deceptive about the few fees it charges.
Customer Service & Technical Support
Customer service is available via phone or email. LendingClub also maintains Facebook and Twitter accounts for quick, informal contact. Additionally, you’ll be able to find the answers to many basic questions via LendingClub’s FAQ.
The customer service for LendingClub’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 and help with your application and funding. If you hit a bump along the way, you can get in touch with the same individual each time for support, instead of spinning the roulette wheel with standard customer support.
Negatives Reviews & Complaints
LendingClub Corporation is accredited by the Better Business Bureau. Over the last three years, the company has had 267 complaints and over 100 negative reviews. Due to the range of products and services offered by LendingClub, these complaints are from investors and personal and auto loan borrowers as well as business loan borrowers.
Here are the most common complaints about the business loan side of LendingClub’s services:
- Origination Fee: Aside from interest, the origination fee is the only major expense that comes with a LendingClub loan. The fee is disclosed on the LendingClub site, but some people are surprised by it during the application process. Note that, for Lending Club’s business loans, the fee is deducted from the principal before the loan is issued. For example, if you are approved for a $50,000 loan, you will actually receive between $49,005 and $45,505, depending on the size of your origination fee.
- Denial After Pre-approval: The word pre-approval doesn’t mean what you might think. In this case, pre-approval means that based on the information LendingClub has gathered about you, you may be eligible for a loan. However, once LendingClub gathers more information, the lender might discover that you’re not eligible after all.
- Advanced Fee Scam: LendingClub has been accused of fraudulent activity. Numerous complaints on the BBB website site state that LendingClub 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, LendingClub 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 LendingClub name or a variation of LendingClub. They promise the victim that they can obtain a loan through LendingClub 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 LendingClub has no relationship.
- Technical Issues: Some customers have voiced complaints about technical errors which result in inaccurate credit reporting or delayed applications.
It’s worth noting that LendingClub is currently involved in a pending lawsuit with the Federal Trade Commission (FTC), which alleges that LendingClub has not complied with FTC requirements regarding hidden fees and advertising standards for personal loans. LendingClub has issued a response to the FTC, which can be found on its blog.
Positive Reviews & Testimonials
LendingClub has published a number of customer testimonials on its 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.
Here’s what customers cited as positive aspects of LendingClub’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 LendingClub business loan or line of credit? What was your experience like? Leave a message in the comments!
LendingClub’s business loans can 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. If you need a quick business loan, or you aren’t large enough to qualify for a loan from a bank, LendingClub might be the lender for your business.
That said, as other lenders offer similar terms and fees to LendingClub, it may behoove you to make some comparisons before committing to a LendingClub loan. Interested in your other options? Check out a comparison of our favorite small business lenders or our full list of reviews.