Lendio Review

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Date Established

2011

Location

Woodbury, NY

Pros

• Relaxed credit score requirements
• 2-7 days time to funding

Cons

• Opaque terms and fees
• Relatively slower time to funding compare to many alternative lenders

Overview

Lendio is a business financing platform that matches customers to funders. While Lendio does not originate loans directly, its network of over 75 business funders — including big names like 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. Rather, this service operates more like a business funding matchmaker. You tell Lendio who you are and what you’re looking for and they, in theory, do 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 certainly 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 toe into the alternative lending market, Lendio is a good place to start.

Interested in learning more? Read on for the details!

Apply For A Loan With Lendio

Services Offered

Lendio is a business loan marketplace. Give them information about yourself and your business, and they’ll 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 factors like your credit score, the industry you work in, how long you’ve been in business, and the amount of revenue you take in.

For a deeper dive into specific alternative lending products, check out our guides on:

• Short-term Loans
• Term Loans
• Merchant Cash Advances
• Lines of Credit
• SBA Loans
• Equipment Financing

Borrower Qualifications

Any business can apply for Lendio’s services. Unfortunately, you are not guaranteed funding; according to Lendio, only six out of 10 businesses are approved for a business loan through their service.

Because Lendio works with over 75 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 actually 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.

Rates & Fees

Lendio does not charge a fee for their service. Instead, Lendio’s revenue comes from their 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.

Fees for borrowing capital 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 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.
• Flat Fee: Some alternative lenders, especially those offering short-term loans and merchant cash advances, may use a flat fee rather than an interest rate. A flat 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 percent flat fee (or 1.2 rate), you’d owe $12,000. While easier to understand than interest rates, be careful with flat 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 flat fee — they present the “cost” of processing and managing your loan. These fees are often not disclosed up front, so be sure to ask your lender about them.
• 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.

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 to expect by product type.

Business Lines of Credit

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

Lines of credit grant businesses a bit more flexibility than they’d have with a loan. Broadly speaking, 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, only paying 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 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 a number of different types of SBA loans, the most common being 7(a) and 504. There are additional types that you may find circumstantially useful (disaster loans come to mind).

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, a status the SBA confers upon some of their 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.

Be aware, however, that most short-term loans have to be repaid daily 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, they charge a flat percentage fee. So, for example, if you borrow $1,000 at a 1.3 factor rate, you’ll owe $1,300. As I mentioned above, while this fee is easy to wrap your head around, it can actually disguise just how expensive the money you’re getting is.

Due to the flat-fee structure, you don’t have to worry as much about prepayment penalties and in some cases, you may actually 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 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 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, may be a little confusing if you haven’t encountered them before. Essentially, a personal guarantee allows the lender to come after your personal assets as well as 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 like prepayment penalties (as the name implies, these are fees charged for paying off your loan before the agreed-upon terms).

Merchant Cash Advance

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 them to skirt around many of the regulations governing short-term loans. Depending on how badly you need the money, this can be a good or bad thing.

MCAs are a very expensive way to get funding for your business, but they tend to have very low credit qualifications. Like short-term loans, the interest rate associated with them is actually a flat fee. That fee may be expressed as a percentage (as in the table above) or as a decimal multiplier: 1.18 instead of 18 percent. 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. If you’re having a rough quarter or two, on the other hand, 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 for the purpose of buying equipment, you’re using it to acquire a tangible asset that can be used as collateral for the loan. This, in theory at least, can reduce the risk to the lender and allow them to offer better terms and rates than they would without the collateral.  This comes with some tradeoffs. Even when you’re dealing with alternative lenders, the equipment financing process tends to be a bit more traditional. In the case of Lendio, they suggest 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’d 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, the company will perform a soft pull on your credit, which will not have an effect on your score.

Lendio will shop your information around to get offers from lenders 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. Customers do not report incidents in which they were surprised by fees or other unexpected policies. The only caveat is that you won’t know the exact terms of your loan until you are paired with a lender. Considering that 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.

Apply For A Loan With Lendio

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 their 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 their agreement means they at least understand how important these issues are to creating a positive experience for borrowers.

Customers report that the service is proactive, helpful, and transparent. 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 heavyhanded with the sales pressure when it comes to phone conversations. Some have also complained about receiving a lot of calls from funding managers.

Negative Reviews & Complaints

Lendio has a Better Business Bureau file, though the company is not currently accredited. Lendio has racked up a total of six complaints in the past three years and currently has an A+ rating. Somewhat unusual for a finance company, Lendio also rates pretty highly on BBB’s customer reviews, with an aggregate score of 4+ stars. There are, however, are 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 1,213 reviews, with an aggregate rating of 9.5 out of 10. Additionally, the company has a number of longer testimonials on their 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 to each borrower individually.
• 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 their 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.

Apply For A Loan With Lendio

• Bio
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Chris Motola

Finance Writer at Merchant Maverick

Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.

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