Lending Club Business Loans Review

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Date Established
2006
Location
San Francisco, CA

Pros

  • Relaxed borrower qualifications
  • Competitive terms and fees
  • No prepayment penalty
  • 1 – 4 week time to funding
  • Excellent customer support

Cons

  • At least fair credit required
  • Potentially high origination fee

Overview

Founded way back in 2006, Lending Club is credited as one of the first companies to offer fast, online loans. Although originally Lending Club only offered personal loans, over the years the lender has expanded their roster to include business loans and auto refinancing. This review covers Lending Club’s business loans; for a rundown on this company’s personal loans (which can be used for business purposes) head over to our Lending Club Personal Loans Review.

Currently, Lending Club 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). Although this lender also offered business lines of credit in the past, they no longer offer that service.

If your business is at least 12 months old and makes at least $50,000 per year, you might be eligible for a business loan. Is this the right loan for you? Keep reading to find out!

Services Offered

Lending Club offers business installment loans. The company also offers personal loans and auto refinancing. 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 a Lending Club 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.

Terms & Fees

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

Borrowing amount:$5,000 – $300,000
Term length:1 – 5 years
Interest rate:5.9% – 25.9%
Origination fee:0.99% – 6.99%
APR range:9.77% – 35.71%
Collateral:Personal guarantee
Blanket lien on loans above $100,000

Lending Club’s installment loans are dispersed in one lump sum and repaid via fixed monthly payments. Before you receive the funds, Lending Club will deduct a small 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, Lending Club does not charge any extra fees. For example, you will not be charged application fees, maintenance fees, or prepayment penalties.

Application Process

Lending Club describes the business loan application process on their FAQ. Note, however, that as of writing this, some of the borrower qualification information is outdated.

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 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. Lending Club 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 might take longer if there are complications confirming information.

Sales & 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 disclosed numerous times on the website and FAQ. 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 & 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 many 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 and 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 & Complaints

LendingClub Corporation currently has an A+ rating on the BBB website. Over the last three years, they’ve had 239 complaints and 50 negative reviews. Due to the range of products and services offered by Lending Club, 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 lending side of Lending Club’s services:

  • 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, 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 $46,505, depending on the size of your origination fee.
  • Denial After Preapproval: The word preapproval doesn’t mean what you might think. Preapproval means that, based on the information Lending Club has gathered about you, you are eligible for a loan. However, once Lending Club gathers more information, they might discover that you’re not eligible after all.
  • Advanced Fee Scam: In the past, Lending Club has been accused of fraudulent activity. Numerous complaints on the BBB site 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.

  • Technical Issues: Some customers have voiced complaints about technical errors which result in inaccurate credit reporting or delayed applications.
  • May 2016 Scandal: It’s worth noting that in 2016, the CEO resigned when it was discovered that there were inaccuracies in some of the loans Lending Club sold to investors. Merchant Maverick decided that this would not affect our rating or review of the company, both because this is a review of the borrowing side of the service (whereas the scandal involved the investor side) and because the board took swift action to amend the problem.

Positive Reviews & 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.

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 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, Lending Club might be the lender for your business.

That said, 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. 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
Leave a comment

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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