Lending Club Review

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

Highlights

  • Personal loans used for business
  • Business loans
  • Business lines of credit
  • Long loan terms
  • Monthly repayments
  • No prepayment penalties
  • Great customer service

Overview

In terms of internet time, Lending Club is old news. This peer-to-peer (P2P) lender was founded in 2006; you know, all the way back when Facebook and YouTube were new things, and Instagram was just a distant gleam in the eye of, well, whoever invented Instagram.

In this case, though, old does not mean obsolete. Lending Club continues to be one of the largest and most popular P2P lenders available. They’re largely known for helping individuals refinance credit card debt, but they’ve carved a name out for themselves in the business financing world as well.

Lending Club offers many options for businesses in need of financing. Been in business at least two years? You’re probably eligible for their term loans or lines of credit. Haven’t quite hit that mark yet? You can also use Lending Club’s personal loans for business purposes.

It should be noted that this lender is not a good option for those of you with bad credit, regardless of what sort of loan you’re interested in. You have to have at least “fair” credit to qualify for a loan, meaning about 640 or above. Because Lending Club is a P2P lender, they tend to be more risk-adverse than other online lenders.

However, if you’re eligible, Lending Club is worth including in your comparisons. Interest rates, though higher than you’d get with a bank, are competitive with similar lenders, and the application process is very fast.

Still interested? Read on for the details!

Services Offered

  • Business term loans
  • Business lines of credit
  • Personal loans for business

Borrower Qualifications

To qualify for Lending Club’s services, here’s what you need:

Personal loanBusiness loan OR
line of credit
Time in business:n/a2 years
Credit score:640640
Revenue:n/a$75K/year

Lending Club does not require any information about your business to issue a personal loan, as their decision to lend is based off your personal creditworthiness, not that of your business. You do need credit score of 640 or above and a low debt-to-income ratio to qualify, however.

On the other hand, to get a business loan, either a term loan or line of credit, you need to have been in business at least two years, have a credit score of 640 or above, and be making at least $75K per year. In addition, your business must not have any recent bankruptcies or tax liens.

Terms and Fees

Lending Club offers personal loans that can be used for business, business term loans, and business lines of credit.

All these loans have an origination fee—a one time fee charged based on a percentage of your principal. The fee is deducted from your principal before the money is sent to you; if you need a specific amount of money, make sure to ask for a little extra to cover the origination fee.

Here are the stats for each product:

Personal Loans

Borrowing amount:$1K – $40K
Term length:3 OR 5 years
Interest rate:5.32% – 30.99%
Origination fee:1% – 6%
APR range:5.99% – 35.96%
Collateral:Unsecured

Lending Club’s personal loans are term loans, which means the capital is dispersed in one lump sum, and interest is charged on the full amount outstanding until the debt is repaid.

These loans do not require any specific collateral.

Business Term Loan

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

The business term loans are, like the personal loans, dispersed in one lump sum, and interest is periodically calculated based on the outstanding amount.

Lending Club requires a personal guarantee on all loans, and a blanket lien on loans with borrowing amounts above $100K.

Business Line of Credit

Credit line size:$5K – $300K
Term length:25 months
Interest rate:Variable, 6.25% – 21.85%
Draw fee:1% – 2%
APR range:7.2% – 23.9%
Collateral:Personal guarantee
Blanket lien on loans above $100K

Lending Club’s lines of credit function like standard revolving credit lines. You are given a maximum borrowing amount, and can borrow capital up to that amount any time. As you repay your debt, you replenish your credit limit.

Note that Lending Club’s lines of credit have a variable interest rate. Currently, they range between 6.25% and 21.85%, but the numbers will fluctuate along with the WSJ’s prime rate.

Lines of credit are repaid monthly. Each month you’ll pay 4% of the principal plus interest. However, you can repay early without penalty and save money on interest.

As with business term loans, you’ll be required to sign a personal guarantee for all lines, and have a blanket lien on lines with borrowing amounts above $100K.

Application Process

Lending Club describes the application process for business loans and personal loans on their FAQ. The application process is largely the same for all loans.

You begin the application by filling out the pertinent form online. If you’re applying for a personal loan, you’ll have to answer basic questions about yourself and your personal finances. If you’re applying for a business loan, you’ll have to answer basic questions about yourself, your business, and your business’s finances.

At this point, you will receive a quote detailing the loan amounts, term lengths, interest rates and origination fees available to you. A longer term length means a larger interest rate, but lower monthly payments. Conversely, a shorter term length means a smaller interest rate, but higher monthly payments.

You can use the information quoted to you to determine whether you want to continue on with 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 that prove the accuracy of the information you’ve already provided to Lending Club. 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 though 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 a term 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.

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.

It’s worth noting that many customers feel misled by Lending Club’s mailers, which claim the customer has been “preapproved” for a loan. As stated below, preapproval is not indicative of whether or not you’re actually qualified for a loan. Lending Club identifies potential borrowers through third party sources, but may find reason to decline your application when they gather more detailed information about your situation.

Customer Service and Technical Support

While you can find some complaints about Lending Club’s customer service on the web, customers are largely silent on the matter, indicating that most people have fine experiences with Lending Club’s customer service.

The customer service for this lender’s business loan division is especially helpful. This is 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.

Customer service for personal loans are available Monday – Saturday from 6AM to 5PM PST. Client Advisers are available Monday – Friday, from 7AM to 5PM PST. Lending Club also runs a Facebook and Twitter for quick, informal contact. You can also find a fairly comprehensive FAQ for Lending Club’s personal and business loans.

Negatives Reviews and Complaints

LendingClub Corporation currently has an A+ rating on the BBB. There have been 203 complaints filed over the last three years, 101 of which were closed last year, showing an overall increase in complaints. The BBB also shows 38 customer reviews (two neutral, 23 negative, and 13 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. Of course, Lending Club does not charge advance 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, this 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. It’s important to note that the origination fee is taken out of the requested loan amount. For example, if you need $20K and have an origination fee of 4%, you will need to apply for a loan of about $20,800.
  • Application delays: Most applications are processed in 10 days or less, but the delays can occur in the application process, especially when there is an issue verifying certain information, such as income.
  • Denial after preapproval: The word preapproval doesn’t mean what you might think. Just about anyone who could potentially be a good customer can get preapproved. This does not by any stretch of the imagination mean that your loan will definitely be funded, or that your application won’t be denied after more information is gathered.
  • Bank verification delays: To authenticate the bank account you’ve provided, Lending Club will make two small transactions that you must verify. This process shouldn’t take long, but some users have complained about delays.
  • Verification phone call issues: To confirm your identity, Lending Club might call you up to ask a few personal questions. This can be a problem for customers who are phone-shy or have conflicting schedules. Unfortunately, there’s no way around the call.

Positive Reviews and Testimonials

LendingClub has published about 20 short business loan testimonials on its website, all of which appear authentic. Most cite ease of application process and speed of loan funding as standout positive attributes. The 13 positive reviews at the BBB mention the same favorable aspects.

Unfortunately there are no in-depth, independent reviews for Lending Club’s loans currently published, especially regarding their business loan department. If you’ve gotten a loan from this lender, we’d love to hear from you! Leave a comment at the bottom of this page with your impressions, experiences, complaints, or praise.

Final Verdict

Lending Club offers a variety of funding options which are helpful to businesses of many different sizes. The most frequent complaints against this service—delays, denials, fees—are commonplace in the lending industry at large. At the very least, online lenders like Lending Club help to streamline and speed up the application process, and eliminate unnecessary fees.

As always, remember that Lending Club is not your only option. Businesses eligible for Lending Club’s business loans might be able to get bank loans (if they have the time and inclination). There are also other marketplace lenders that might offer better deals whether your business is well-established or just starting out. (One notable lender is Dealstruck. Because they only require a year in business, they fill in the gap between Lending Club’s personal loans and business loans.)

Overall, Lending Club is an honest loan provider with good advertising transparency. It’s certainly not a ripoff or a scam, despite what a few (mistaken) complainants at the BBB maintain. Go ahead and get a quote, just don’t forget to make some comparisons before committing.

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

    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.

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