Lendio Review

Pros

• Borrower qualifications are lower than what banks have
• Multiple types of financing available
• High borrowing amounts
• Long-term financing options available
• Applicants can quickly be prequalified
• The application process is fast and easy
• Customer service is helpful

Cons

• Rates can be expensive
• Funds can take a while to disburse

Overview

Lendio is a business financing platform that matches customers to funders. While Lendio does not originate loans directly, its network of over 300 business funders — including big names, such as Kabbage, OnDeck, Amex, BlueVine, and many others — is designed to be a one-stop-shop for financing.

In the interest of clarity, let’s get this out of the way first: Lendio does not originate business loans. Instead, this service operates more as a matchmaker for lenders and business owners. You tell Lendio who you are and what you’re looking for, and it, in theory, does the rest.

Using an aggregator such as Lendio can be beneficial for a few different reasons: The company does most of the work of finding financing for you (which saves time), you are presented with multiple offers (you can be sure you aren’t missing out on a better offer), and the service is absolutely free to use.

For those who want to give it a try, Lendio is undoubtedly worth the effort. Customers report that Lendio’s customer service is responsive and helpful, and the application process is fast and easy. If it’s your first time dipping your toes into the alternative lending market, Lendio is a good place to start.

Are you interested in learning more? Read on for the details!

Services Offered By Lendio

Lendio is a business loan marketplace. Provide information about yourself and your business, and Lendio will help you find lenders for which you’re eligible. This includes a broad swath of financial products. The availability of specific products will depend on various factors, such as your credit score, the industry you work in, how long you’ve been in business, and the amount of revenue you take in. Additionally, loan terms will vary between Lendio’s partner lenders.

Loan options available through Lendio include:

• Short-Term Loans: An installment loan with a term that usually lasts less than a year, and borrowers are charged a flat fee rather than the typical interest rate. Repayments are made daily or weekly.
• Term Loans: Your classic loan where borrowers are provided the loan amount in the form of a lump sum in exchange for a promise to repay the amount borrowed plus accumulated interest. Term lengths vary with these loans. Payments are made monthly, weekly, or daily.
• Merchant Cash Advances: The funder purchases a percentage of your future card-based sales in exchange for a lump sum. The funder collects by withholding a percentage of your daily card-based sales.
• Lines Of Credit: Rather than giving you a lump sum, the lender establishes a credit limit that you can borrow against. You can draw on your line of credit repeatedly so long as the total drawn amount doesn’t exceed your credit limit.
• SBA Loans: Term loans and other products that are partially guaranteed by the Small Business Administration. These loans have some favorable properties relative to most other loans with regard to term length, interest rates, and available loan amounts.
• Equipment Financing: Loans and leases that are designed to facilitate ownership or rental of tangible assets.

Lendio Borrower Requirements

Any business can apply for Lendio’s services. Unfortunately, there’s no guarantee that you will receive funding; according to Lendio, only six out of ten businesses get approved for a business loan through its service.

Because Lendio works with over 300 different entities, ranging from lenders who specialize in startup business loans to banks and SBA lenders, your business does not have to meet any specific qualifications to be eligible for this service. 

That said, just because you’re eligible to give the service a go does not mean you will receive funding. To have the best chance of getting funding, Lendio recommends you meet or exceed these qualifications:

Some businesses may have trouble meeting those guidelines. For example, startups, those in risky industries, or businesses with little revenue may have more difficulty finding financing. Additionally, the requirements for equipment financing are more stringent. The preferred qualifications for that type of loan are 12 months in business and a 650 credit score.

Lendio Interest Rates & Fees

Lendio does not charge a fee for its service. Instead, Lendio’s revenue comes from its partner lenders. Per Lendio’s FAQ:

Lendio does not charge you to be matched to a potential lender. The offers that appear on the site are from companies from which Lendio receives compensation.

Loan terms will vary, depending on the partner funder you’re working with. These charges may include:

• Interest: The main cost of borrowing, interest is usually expressed as a percentage of the loan amount that you borrowed. This number may be confusing because different lenders may cite a daily, weekly, quarterly, or annual interest rate. Make sure you know which one you’re looking at.
• Fixed Fee: Some alternative lenders, especially those offering short-term loans and merchant cash advances, may use a fixed fee rather than an interest rate. A fixed fee is expressed as a percentage of the amount you borrowed or as a decimal multiplier. So if you borrowed $10,000 at a 20% fee (or a 1.2 rate), you’d owe $12,000. While easier to understand than interest rates, be careful with fixed fees; they can often be more expensive.
• Origination & Administration Fees: These are fees that may or may not be charged by the lender in addition to your interest rate or a flat fee — they represent the “cost” of processing and managing your loan. These fees might not be disclosed upfront, so be sure to ask your lender about them. These fees may be flat or a percentage of your loan amount.
• Prepayment Penalties: You’d think a lender would be happy to get their money back sooner, right? Well, not always, especially if they’re counting on accruing a minimum amount of interest over time. Some lenders may charge a fee if you pay off your loan early. If you’re thinking about doing so, make sure you’re working with a lender who doesn’t charge this fee.
• Other Fees: More types of fees? If you can think of it, there’s probably someone who charges for it. Some lenders may charge fees for processing certain types of payments, for example.

Are you looking for a more exhaustive look at fees charged by alternative lenders? Check out our article about common fees charged during the lending process. For more specifics, check to see if we’ve reviewed the service on the Merchant Maverick site.

Additionally, Lendio does offer some general information about what loan terms to expect by product type.

Business Lines Of Credit

Here are the terms you can expect for a business line of credit through Lendio.

Lines of credit grant businesses a bit more flexibility than they’d have with a loan. They come in two different forms: revolving and non-revolving. Revolving lines of credit function a bit like credit cards. You can draw on them in small or large amounts up to your credit limit, and you only pay interest on the amount of credit you’ve used. As you pay off your debt, that credit becomes available to use again. Non-revolving lines of credit are nearly identical, but the credit is a one-time deal; after you pay it off, it doesn’t become available for use again. Typically, revolving lines of credit have higher interest rates than non-revolving lines of credit.

The convenience of a line of credit generally comes at a premium, often in the form of recurring administrative fees (monthly or annually) or draw fees. Otherwise, you’ll pay off your line of credit in the same way you’d pay off a term loan. Some lenders may even allow a grace period on your business credit before you need to start making payments.

SBA Loans

Here are the terms you can expect from an SBA loan through Lendio.

Businesses that qualify can get an SBA-guaranteed loan through one of Lendio’s partners. These loans tend to have lower interest rates and longer terms than the ones newer small businesses may otherwise be able to access. There are several different types of SBA loans, the most common being general 7(a) loans and CDC/504 construction and equipment loans. There are additional types that you may find circumstantially useful, such as disaster loans.

Be prepared for a longer approval process if you decide to apply for an SBA loan since you’ll have to satisfy the substantial requirements and paperwork required by the Small Business Administration. Some lenders may offer SBA Express Loans, which can expedite the process a bit — it’s still not super fast — at the cost of a lower maximum borrowing amount. Going through a preferred lender, which is a status that the SBA confers upon some of its partners, will also speed up the process.

Short-Term Loans

Here are the terms for short-term loans through Lendio.

If you need working capital fast, especially if you don’t have great credit, a short-term loan can come in handy. These loans typically have expedited and simple application processes, with funds reaching your bank account in a day or two if you’re lucky.

However, be aware that most short-term loans have to be repaid daily or weekly through an automated withdrawal from your business bank account. Short-term loans usually don’t accumulate interest like other term loans, as they typically last less than a year. Instead, lenders charge a fixed percentage fee. For example, if you borrow $1,000 at a factor rate of 1.3, you’ll owe $1,300. As I mentioned above, while this fee is easy to wrap your head around, it can disguise just how expensive the money you’re getting is.

Due to the fixed-fee structure, you don’t have to worry as much about prepayment penalties, and in some cases, you may be able to reduce the amount of money you owe by paying off your loan early. Usually, lenders that allow this will be pretty upfront about it, but be sure to ask if you anticipate paying off your loan early.

Because short-term loans often rely on high-interest rates and the laws governing interest vary from state to state, individual lenders may or may not offer them within your state. And if they do, the supplemental fee structure may vary from state to state.

Business Term Loans

Here are the terms for business term loans through Lendio.

Business term loans are closer to the traditional bank loans you may be used to. They accumulate interest and feature regular, recurring payments. These payments may be monthly, weekly, or even daily. In many cases, those payments will be automatically deducted from your business checking account through an automated clearing house (ACH) or a similar service.

Depending on the lender, you may have to provide collateral or sign a personal guarantee. These allow the lender to claim or liquidate the asset you put up to recoup some of their loss should you default on your loan. Be sure you understand what you’re putting up for the loan, especially in the case of unsecured loans, which don’t use traditional collateral. Personal guarantees, in particular, might be a little confusing if you haven’t encountered them before. Essentially, a personal guarantee allows the lender to come after your personal assets and your business assets should you fail to keep up with payments.

Since term loans last a bit longer, and your financial situation may change, you’ll want to be aware of factors such as prepayment penalties (as the name implies, these are fees charged for paying off your loan before the agreed-upon terms).

Merchant Cash Advances

Here are the terms for merchant cash advances made through Lendio:

A merchant cash advance superficially resembles a short-term loan but differs in some important ways. Technically, you’re not borrowing money; you’re being paid for a claim on your future credit card receipts. This loophole allows lenders to skirt around many of the regulations governing business loans. Depending on how badly you need the money, this can be a good or bad thing.

MCAs are a costly way to get funding for your business, but they tend to have very low credit score qualifications. Like short-term loans, the interest rate associated with MCAs is a fixed fee. That fee may be expressed as a percentage (as in the table above) or as a decimal multiplier (1.18 instead of 18%). To get the amount you owe, multiply the amount of money you’re seeking by the interest rate ($10,000 x 1.18 = $11,800).

Unlike loans, MCAs don’t have definitive term lengths. Instead, your funder will collect a percentage of your daily credit card sales until the advance has been paid off. So if you’re doing really good business, you’ll pay your MCA back more quickly. On the other hand, if you’re having a rough quarter or two, your MCA can drag on for quite some time.

Equipment Financing

Here are the terms for equipment financing through Lendio:

Equipment loans, despite sharing many traits with a business term loan — regular payments, interest — are handled differently than loans used for working capital.

When you’re borrowing money to buy equipment, you’re using it to acquire a tangible asset that can be used as collateral for the loan. In theory, this can reduce the lender’s risk and allow them to offer better terms and rates than they would without the collateral. This comes with some tradeoffs. Even when dealing with alternative lenders, the equipment financing process tends to be a bit more traditional. Lendio suggests a 650 minimum credit rating and 12 months in business.

While many equipment loans traditionally require a down payment, Lendio’s funders do not.

Application Process

If you’re a business owner who would like to apply, you must start by creating an account and filling out an application. The application will ask for basic information about yourself, your business, and your business finances. At this point, Lendio will perform a soft pull on your credit report, which will not affect your score.

Lendio will shop your information around to get offers from the lenders that you may be eligible for. According to the customer service agreement, this step should take no longer than 72 hours.

A Lendio representative will get back to you with any offers received on your behalf. You can compare offers and choose the one best suited for your business and situation. When you’ve made your decision, you will be able to continue the funding process with your chosen lender.

Sales & Advertising Transparency

Lendio’s website provides all the information you need to know about the service, and the salespeople are similarly transparent. Customer reviews do not report incidents in which they were surprised by fees or other unexpected policies. The only caveat is that you won’t know your loan’s exact terms until you are paired with a lender. Considering Lendio itself doesn’t have that information, it does an admirable job of preparing prospective borrowers for what they might expect.

There are some subtle differences between the types of loan products, so you may need to click through some links to find all the information available. Be sure to make use of the loan calculators to get a handle on what to expect.

Lendio’s usually excellent rating where sales and advertising transparency does have a gray mark on it this year, however. The company was warned by the Federal Trade Commission and SBA about potentially misleading coronavirus relief marketing.

Customer Service & Technical Support

Customer support is available by phone or email. You can also interact with the company on Facebook, Twitter, Instagram, and LinkedIn.

When you apply for the service, you are assigned a funding manager who is your single point of contact. Your funding manager will bring you offers, help decide which options are best for your business, educate you on the loan products, and generally be available if you have any questions.

It’s worth noting that Lendio has a public customer service agreement on its website, which promises customer service standards, such as treating the customer with “transparency and respect” and answering questions “in a timely manner.” Although these are not particularly groundbreaking standards, the fact that Lendio publicly posts its agreement means the company at least understands how important these issues are to creating a positive experience for borrowers.

Customers report that the service is proactive, helpful, and transparent, and many like being assigned to a single funding manager who is familiar with their business and situation. However, a few customers say that the service is too heavy-handed with the sales pressure when it comes to phone conversations. Some have also complained about receiving a lot of calls from funding managers.

Lendio Customer Reviews, Complaints, & Testimonials

Negative Reviews & Complaints

Lendio has a Better Business Bureau profile, though the company is not currently accredited. Lendio has racked up a total of 37 complaints in the past three years, 34 of which were in the last 12 months, and currently has an A+ rating. As is the case for most lenders that experienced a glut of complaints in 2020, many of Lendio’s new complaints are PPP-related.

Somewhat more concerning, however, is a warning Lendio received from the Federal Trade Commission and the SBA concerning “misleading coronavirus relief marketing.”

There are, however, some issues people have complained about:

• Delays: While still fast compared to traditional lending, Lendio is a bit slower than many of the individual companies it partners with. Some customers also complained about falling through the cracks.
• Drawn Out Process: Related to the delays, one prominent complaint spoke of receiving regular new offers from Lendio that were then never followed through.
• Hard Credit Inquiries: Some customers complained about receiving hard inquiries on their credit when they were told there would only be soft ones.
• Lots Of Documentation Needed: Some customers had to provide a lot more documentation than they were prepared for.
• Mismatches: Some customers complained about being paired with lenders who were a poor match for their business and industry type.

Positive Reviews & Testimonials

On Trustpilot, Lendio has over 4,000 reviews, with an aggregate rating of 4.9 out of 5. Additionally, the company has some longer testimonials on its YouTube page.

Here are some of the things people like about Lendio:

• Customer Service: Users found Lendio’s customer service to be helpful and responsive in most cases. The dedicated case managers were generally well-received by customers.
• Easy To Use: Many customers found the centralized platform and its interface easy and intuitive to work with.
• Fast: While a little slower than some other alternative options, the process is still pretty quick, especially when compared to traditional sources.
• Stress Saving: Lendio removes a lot of the legwork borrowers would otherwise have to do with each lender.
• Easy To Qualify: Customers who had trouble qualifying for loans through traditional sources appreciated that Lendio was able to find them funding at relatively reasonable terms.

We’d like to hear from you, though! Have you tried Lendio? Do you have anything to add to the conversation? Leave a comment below!

Final Verdict

Over the last decade, a huge number of online lenders have cropped up, and many of these lenders have innovated funding in ways that are beneficial to merchants. However, the sheer number of options available means it’s difficult, not to mention time-consuming, for merchants to find a product suited for their business.

If it’s your first time looking for alternative funding and you’re confused about where to start your search or don’t have the time to fill out multiple applications, Lendio may be an excellent resource for your business. This company (and others like it) provides a much-needed service. Even better, there’s no fee for using the service, which puts Lendio ahead of some of its competition. If, however, you already have a good working relationship with a lender you like, you can probably expedite the process by directly working with that lender.

If you’d prefer to apply to a lender directly, check out our small business loans comparison chart or an alternative suggestions page.

FAQs About Lendio

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After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Lendio for yourself.

The Merchant Maverick Seal of Approval 🏆

Lendio	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Lendio for yourself.

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