Top Personal Loans For Business Compared
Let’s say you’re an entrepreneur with a plan of action. You’re passionate about what you do and you’ve developed the schematics to launch your own venture. You’re got the skills, the drive, and the business plan. Now, all you need is some startup capital. To this end, you should have little trouble getting a business loan, because our society is built upon the shared premise that we collectively stand to benefit when smart ideas and hard work are given the initial support they need to grow and thrive.
Kidding! The Great Recession may have faded from the popular imagination, but its legacy remains, and business loans offered by banks remain exceedingly difficult to qualify for. The good news is that while bankers may turn up their noses to you, there exists an assortment of online lenders who deal in personal loans which can be used to fund your young business.
With personal loans, you’re leveraging your personal creditworthiness, not that of your not-yet-profitable business. The primary players in the online personal loans game are “traditional” online lenders, backed by banks and other financial entities, who offer personal installment loans, often with high interest rates. The other big players are peer-to-peer (or P2P) lenders who tend to offer lower interest rates but smaller loan amounts.
In this article, we’ll compare eight of the leading online personal loan outfits. On the “traditional” side, we have SoFi, RocketLoans, LendingPoint, Discover Personal Loans, and Avant. On the P2P side, we have Lending Club, Prosper, and Upstart.
Table of Contents
Here’s what you need to qualify for our chosen personal loan vendors:
|Proof of US Citizenship||18+ Years Old||Required Credit Score||Required Annual Income|
|Avant||Yes||Yes||600 – 700||No requirement, but preferably over $40K|
|Discover Personal Loans||Yes||Yes||660||$25K|
|LendingPoint||Yes||Yes||600 – 680||$20K|
|Lending Club Personal Loans||Yes||Yes||600||$55,775|
As you can see, SoFi and Discover have the most onerous loan requirements, with LendingPoint and Avant falling more on the lax side. Avant, in particular, is known as a lending platform friendly to those with poor credit.
Remember, you can meet the stated minimum requirements and still be rejected for a loan if the lender finds something in your credit history or financial situation that it doesn’t like.
Terms and Fees
Let’s see how our lenders compare with respect to their terms and fees:
|Borrowing Amount||Term Length||Origination Fee||APR|
|Avant||$1K – $35K||2 – 5 years||0.95% – 4.75%||9.95% – 36% (fixed)|
|Discover Personal Loans||$2.5K – $35K||3 – 7 years||None||6.99% – 24.99% (fixed)|
|LendingPoint||$3.5K – $20K||2 – 4 years||0% – 5%||15.49% – 34.99% (fixed)|
|Lending Club Personal Loans||$1K – $40K||3 OR 5 years||0% – 5%||5.99% – 35.96% (fixed)|
|Prosper||$2K – $35K||3 OR 5 years||1% – 5%||5.99% – 36% (fixed)|
|RocketLoans||$2K – $35K||3 OR 5 years||1% – 6%||5.983% – 28.99% (fixed)|
|SoFi||$5K – $100K||3, 5, OR 7 years||None||5.70% – 14.24% (fixed)|
4.77% – 10.87% (variable)
|Upstart||$1K – $50K||3 OR 5 years||2.8% – 6%||6.25% – 29.99% (fixed)|
Most of our chosen lenders here offer roughly similar terms and fees. SoFi stands out as the lender with the highest maximum borrowing amount (at $100K).
Each lender has its own particular application process, with P2P lenders generally having a more complex process than “regular” online lenders. While the process may differ with each lender, I’ll focus on the amount of time it should take from when you apply for the loan to when you get the money.
- SoFi: About 10 days
- Prosper: 3 – 5 business days
- RocketLoans: 1 – 3 business days
- LendingPoint: 1 – 2 business days
- Avant: 1 – 2 business days
- Discover: 1 – 2 business days
- Lending Club: About a week
- Upstart: Generally less than a week
Discover, Avant, LendingPoint, and RocketLoans generally provide the quickest route to getting funding if you are approved for a loan.
Sales and Advertising Transparency
In reviewing all these lenders, we at Merchant Maverick generally found all of them to be pretty transparent about what they have to offer. Prosper might stand to benefit from greater disclosure of their rates and fees, however.
Customer Service and Technical Support
In terms of customer support, we haven’t found any glaring differences between the companies featured here. None of them stand out as providing particularly poor service.
Reviews and Complaints
Look up any one of these lenders and you’re likely to find plenty of complaints about various aspects of their business policies and customer service. The larger the lender is, the more grievances abound, as a general rule. Some of this is down to the fact that people don’t tend to read the terms too closely when applying for a loan. Some of this comes from the mistaken belief among some that they’re guaranteed to be accepted for a loan if they meet the given minimum qualifications. And some, of course, comes from people having genuinely bad experiences with the company in question.
It’s very difficult to do a direct comparison on this front, but what I can do is give you the average Trustpilot user score (on a 0 to 10 scale) for the lenders I’ve highlighted. Keep in mind that some of these companies offer other services, therefore their user rating may not be solely reflective of their personal loan products.
- SoFi: 9.6 out of 10
- Prosper: 9.4 out of 10
- RocketLoans: 9.4 out of 10
- LendingPoint: 9.4 out of 10
- Avant: 7.9 out of 10
- Discover: 7.4 out of 10 (includes reviews of Discover’s credit card services)
- Lending Club: 8.1 out of 10
- Upstart: 9.4 out of 10
It would be impossible for me to anoint a Winner in the “personal loans for business” lender category, because A) no particular lender could possibly be the best for everybody regardless of their financial needs and circumstances, and B) many of these lenders are very similar to one another. However, some basic facts can be teased out of our comparison. SoFi offers the largest loans but has stringent credit rating requirements. Discover, Avant, LendingPoint, and RocketLoans offer the fastest money (if you’re approved), but can carry high interest rates/APRs.
Each dealer of personal loans has its trade-offs. Research the lenders that most closely fit your needs (and those of your business) to determine which one makes the most sense. Happy hunting!