Lendio Review of Small Business Loans

funderscorner | Funders Corner

Lendio is an enterprise funding platform, which connects customers with funders. Although Lendio does not offer loans directly, it has a partner network of more than 75 business funders, which comprises of big names such as BlueVine, Amex, OnDeck and Kabbage among others, making it a financing one-stop shop.

To set things straight, Lendio does not offer business loans. Instead, it offers a service similar to that of an enterprise financing matchmaker. All you need is informing Lendio about yourself and what you are searching for, and they will actualize it.

Here are some reasons why using a matchmaker like Lendio might be advantageous:

  • It saves you time by looking for a lender for you.
  • You get offered many offers, and all you need is choosing an ideal one.
  • Using the service costs, you nothing.

Lendio is undoubtedly worth trying for those are interested. According to customers report, Lendio has a swift and straightforward application process, as well as helpful and responsive customer support. If its your first time to get into alternative lending market, Lendio should be your starting place.

Services Provided

Lendio is a loan marketplace for businesses. All you need is providing them with your information, and that of your business, and they will get you eligible lenders. The service comprises of a wide space of financial products. However, accessing certain products depends on things such as revenue generated, the age of your business, your business industry and credit score.

Feel free to check our detailed guide on certain alternative lending products such as:

  • Equipment funding.
  • SBA loans.
  • Lines of credit.
  • Merchant cash advances.
  • Term loans.
  • Short-term loans.

Qualifications for Borrowing

Although any business is free to make an application for Lendio services, funding is not guaranteed. As per Lendio, just six out of ten businesses get approved to accessing a business loan via their service.

There are certain requirements for eligibility of the service, because Lendio has more than 75 lenders, who are professionals of SBA, bank loans, and startup business loans.

However, eligibility for the service does not guarantee getting funding. Here are minimum requirements for funding eligibility:

  • Age of business: 6months
  • Credit score: 550
  • Revenue made: $10k/month

Meeting the requirements and getting funding is not easy for startups, businesses in risky industries, and businesses generating low revenue. Also, equipment funding has strict requirements. The requirements include a credit score of 650, and a year in business.

Rates and fees

Instead of charging fees for the service, Lendio gets compensation from its affiliate lenders. Borrowing fees varies with the partner funder who is financing your business. Here are the charges:

  • Prepayment charges: not all lenders get happy when you make repayments earlier, because they aim accumulating interest from the money, which must take time. Thus, some lenders might charge you for repaying earlier. It is advisable you avoid such lenders if possible.
  • Administration and origination fees: besides the flat fee or interest rate, some lenders might charge other fees. The additional fees represent the cost undertaken to manage and process your loan. You should ask about the fees because they are rarely disclosed at the start.
  • Flat fee: instead of applying an interest rate, a flat rate might be applied by alternative lenders who offer merchant cash advances and short-term loans. The flat rate is shown as a decimal multiplier or percentage of borrowed amount. For example, 1.2 or 20% flat rate. Although the fee is easier to comprehend than interest rate, they are mostly expensive.
  • Interest: also known as borrowing cost, which is normally a percentage of total borrowed amount. The rate might annual, quarterly, weekly or daily, depending with the lender.

Lines of credit

The terms of business line of credit via Lendio include:

  • Credit Limit: $1,000-$500,000
  • Term Length: 1-2years
  • Interest rate: 8-24%
  • Origination fee: varies
  • Collateral: undisclosed

Businesses get guaranteed of higher flexibility by lines of credit compared to loans. However, they are of two types. Non-revolving and revolving lines of credit. Revolving one’s work like credit cards.

You have the ability to draw big or small amounts of money using them, until you reach you credit limit, and all you need to do is paying the interest. Non-revolving is similar, although their credit is offered once. You cannot use the credit again after paying. However, unlike non-revolving business lines of credit, the interest rate is higher for revolving lines of credit.

With the line of credit, you only get charged draw fees or regular administrative fees. Alternatively, you make payments similar to those of a term loan. You might also get some grace period before repayment from some lenders.

SBA Loans

  • Credit Limit: $1,000-$5,000,000
  • Term Length: 10-25years
  • Interest rate: prime+
  • Origination fee: lender+SBA fees
  • Collateral: varies

Unlike other loans that startup businesses can access, SBA loans have longer terms and the interest rates are lower. Although there are many SBA loans, 504 and 7(a) are popular. The extra kinds might be helpful in terms of disaster loans.

The application process is very long. Reason being, you must achieve all paperwork and qualifications from small business administration.

Short-Term Loans

  • Credit Limit: $2,500-$500,000
  • Term Length: 1-3years
  • Interest rate: not known
  • Origination fee: by lender
  • Collateral: not known

Short-term loans are good if you urgently need some funding, but your credit is not good enough. The application process is fast and easier, with funds getting into your account within a day or two.

Nevertheless, most short-term loans get deducted automatically from your bank account on a daily basis. Since the loans lasts for some months, they lead to no accumulation of interest. Thus, the loans charge a flat fee. Also, there are no prepayment penalties. Most of these loans depend on high interest rates, while laws regulating interest varies with states.

Term Loans

  • Credit Limit: $5000-$2,000,000
  • Term Length: 1-5years
  • Interest rate: not less than 6%
  • Origination fee: by lender
  • Collateral: varies

Term loans are similar to bank loans. Apart from accumulating interest, their repayments are recurrent. Whether the repayment is done daily, weekly or monthly, they get deducted automatically from your account via ACH.

You might be subjected to signing a personal guarantee, or submit collateral, based on the lender. Thus, in case you have defaulted their loan, your assets can be claimed for repayment. The loans are typically longer, thus the need to know all their charges.

Merchant Cash Advances

  • Credit Limit: $5000-$2,000,000
  • Term Length: not more than 2years
  • Interest rate: not less than 18%
  • Origination fee: by the funder
  • Collateral: not common

They are similar to short-term loans, but their aspects are different. Basically, you get paid for claiming your upcoming credit card receipts, instead of borrowing a loan. As a result, many regulations that govern short-term loans get modified. MCA can be bad or good, based on your money urgency.

Although their credit requirements are minimal, they are extremely costly ways of financing businesses. Similar to short-term loans, they have a flat fee interest rate.

MCAs have no specific term durations like loans. However, your funder deducts a certain percentage from daily credit card sales. Thus, repaying MCAs is faster, if your business is performing well.

Equipment Loans

  • Credit Limit: $5000-$5,000,000
  • Term Length: 1-5years
  • Interest rate: not less than 7.5%
  • Origination fee: by funder
  • Collateral: the equipment getting the funding

Although the have many similarities with term loans, the interest and repayments of equipment loans are treated differently from loans which get used as working capital.

The loans are borrowed for purchasing tangible assets, which can act as the collateral of the loan. As a result, the lender’s risk is lowered, hence enabling the lender to provide favorable terms and rates. However, the application process is more traditional, even with alternative lenders.

According to Lendio you should be in business for one year, and have a credit of at least 650. Traditionally, these types of loans need a down payment, funders from Lendio do not need any down payment.

The Process of Application

The initial step is making an account, followed by filling out an application. Basically, you will be asked to provide information about yourself, finances of your business, and the business itself. After submission of the information, Lendio checks your credit that cannot have an impact on your score.

Lendio will then look for offers from lenders whom you are qualified for. The entire process takes approximately a maximum of 72 hours.
After getting offers, a representative from Lendio will call you. Make a comparison of the offers presented, select the one that suits your needs.

Once you decide, the funding process from your lender will take place.

Clarity in Advertising and Sales

The salespeople are transparent, and all information you should know regarding the service is provided on Lendio’s website. Thus, there are no surprises. However, you only know the terms of your loan after connecting with your lender.

Since Lendio does not have information regarding the terms, it does an exceptional job of ensuring the borrowers are ready for expectations. But, it is good you compare the various loan products.

You can contact Lendio customer support through email or phone. Also, you can use LinkedIn, Instagram, Twitter and Facebook to reach them.

A funding manager gets assigned to you after making an application. The role of the manager is presenting the offers to you, helping you to choose the best offer as per the needs of your business, enlighten you about various loan products and answer all your questions if any.

Borrowers have had a good experience with Lendio, because all the agreements are available on their website, making the service clear, helpful and interactive. However, some customers are angry with the numerous calls and conversations from funding managers.

Although not accredited, Lendio has a file on Better Business Bureau. The company has an A+ rating, and has had six negative reviews for the last three years, which is not normal with most funding companies. Also, Lendio has an aggregate of 4stars of customer reviews. Here some of the reasons for complaints:

  • Mismatches: there were some complains about being matched with lenders who are not suitable with businesses and industry.
  • High documentation: some customers were forced to submit more documents than they thought.
  • Tough credit questions: while questions about credit are said to be basic, customers were asked tough questions.
  • Delays: some offers were provided to customers, but Lendio never followed them to the latter. Also, Lendio is slower compared to its partners.

The aggregate rating of Lendio is 9.5/10 on TrustPilot, which is out of 1,213 reviews. Also, there are positive reviews on YouTube page. Here are attractive things about the service:

  • Qualifying is easy: most customers qualified for funding through Lendio with reasonable terms, while they had been disqualified from traditional funding sources.
  • Minimal stress: a lot of legwork for borrowers have been eliminated by Lendio.
  • Swift: although Lendio is somehow slower than some alternative lenders, its funding process is very fast compared to that of traditional funders.
  • User-friendly: Lendio has a centralized platform, which features a user-friendly interface for most customers.
  • Customer service: Apart from the committed fund managers, customers say that customer service from Lendio is friendly, responsive and helpful.

There has been an increase of online funders over the past decade, who have invented merchant- beneficial means of financing. As a result, the high number of funders have made it difficult for merchants to get ideal funders, as they spend more time comparing and looking for the best offers.

However, Lendio has the solution because its an all-stop shop, and you need to make a single application, hence saving your time. Also, Lendio offers the service free of charge, making it ideal against other competitors.