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IOU Financial Business Loan Review

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Entrepreneurs looking for a small business loan with flexible, short terms may be able to qualify for financing from IOU Financial if their business generates consistent revenue. However, such funding may be expensive once you include fees.

IOU Financial has been lending to business owners since 2009. The company is based in Montreal, with a U.S. operations center in Atlanta.

What IOU Financial offers

Business owners could qualify for a small business loan from IOU Financial to purchase equipment, expand the business, supplement cash flow or buy inventory.

Amount Terms Fees Time to funding
Core Product $10,000 to $150,000 6, 9, 12 months Guarantee fee; 8.80% origination fee; $395 administrative fee 24 to 48 hours after approval
Mid-Market Product $70,000 to $300,000 12, 15, 18 months Guarantee fee; 8.80% origination fee; $395 administrative fee 24 to 48 hours after approval


Loans are available between $10,000 and $500,000 for terms between 6 and 24 months, according to IOU Financial’s website, though it’s not clear what would be required to receive amounts or terms exceeding its Mid-Market loan; the company declined to confirm certain loan details including APR. Public financial statements indicate rates could range between 9.25% and 15.99%, but fees would increase the cost of borrowing. IOU Financial’s website outlines its origination and administrative fee. Public filings say its guarantee fee is between 7.0% and 29.0%.

Do the math. You could use the company’s loan calculator to get an idea of how much financing could cost. For example, if you borrow $50,000 with 12-month terms, you’d ultimately repay $63,634 to $66,384. Following a daily payment schedule, IOU Financial would withdraw between $253 and $263 from your bank account every day — that’s an effective annual rate of about 73% to 85%.

IOU Financial automatically withdraws fixed daily or weekly payments from borrowers’ business bank accounts. However, there’s no penalty for paying off your debt early.

Who is eligible for IOU Financial loans?

IOU Financial works with relatively young small businesses that earn consistent revenue and maintain a minimum balance in their business bank account. To be eligible for a small business loan, you must meet the following criteria:

  • One year in business
  • Annual revenue of $100,000
  • Average daily ending business bank account balance of $3,000
  • At least 10 business bank account deposits per month
  • At least 80% equity in the business

When you apply online, IOU Financial conducts a soft credit inquiry, meaning your credit score would not be affected; however, the lender may make a hard credit check as you move forward with a loan offer. About 85% of applications are pre-approved.

Small business loans from IOU Financial are designed for small retailers and merchant-driven businesses that have relatively high volumes of daily sales. Eligible businesses could fall into a number of industries, including:

  • Auto body shops
  • Hair and nail salons
  • Medical professions
  • Plumbing and electricity
  • Restaurants
  • Specialty retail

Once approved, you could receive funds in one business day. Loan consultants are available to answer questions and help you make a decision about your financing options.

Pros and cons of IOU Financial

IOU Financial offers loans with flexible repayment terms to cover small and large expenses. Along with those positive aspects, consider some of the lender’s potential downsides.

Pros Cons
  • Wide range of funding amounts available for a variety of expenses.
  • Interest rates and fees are not disclosed on its website, making it difficult to determine the cost of financing.
  • Loan renewal option available for borrowers who need additional funds.
  • Credit score requirements are not clear on the IOU Financial website.
  • Money may be available in 24 to 48 hours after approval.
  • Automatic daily payments could be difficult to keep up with.


What fees does IOU Financial charge?

IOU Financial charges a one-time origination fee of 8.80% when your first loan is funded; if you renew your loan, that fee drops to 7.8%. You would also be charged an administrative fee of $395 to pay for underwriting, a guarantee fee to offset the potential costs of default and a fee of $25 if you don’t have sufficient funds in your bank account to cover your daily payment.

Does IOU Financial service its loans?

IOU Financial may service business loans originated through its platform, or send loans to a third party for servicing. Be sure to check the details of your loan agreement.

How do I renew my loan?

Once you’ve repaid 40% of your loan, you would be eligible for additional funding. Renewing your loan would require you to take out a new loan and roll all your debt into one lump sum. You may be able to lower your interest rate and extend your terms when you renew.


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