If your company needs funds, but you don’t qualify for traditional business loans, you could look to LendingClub business loans. The online lender partners with the nonprofit Opportunity Fund and Funding Circle, an online lender specializing in business loans.
What does this mean for you? One stop with access to at least two different lenders. Funding Circle works with established businesses, while Opportunity Fund focuses on underbanked small business owners.
LendingClub’s claim to fame is being a peer-to-peer lenders for personal loans, and that’s what you might be expecting on its business loan side, too. However, LendingClub does not provide business loans directly and advises against using one of its personal loans for business expenses.
Instead, when you complete your online business loan application, LendingClub will screen it according to preset requirements laid out by two partner lenders: Opportunity Fund and Funding Circle. Here’s a closer look at what they offer.
|LendingClub Business Loans|
|Amount||Terms||Fixed Rates||Time to funding|
|Opportunity Fund loans||$5,000 – $100,000||12–60 months||4.99%–24.90%||1-7 business days|
|Funding Circle loans||$25,000 – $500,000||3 months-120 months||4.99%–24.90%||1-7 business days|
Opportunity Fund is a nonprofit Community Development Financial Institution (CDFI) that specializes in giving out microloans to underserved entrepreneurs, including minority- and women-owned businesses that tend to be overlooked by traditional lenders.
Opportunity Fund’s business loans are available through LendingClub in 43 states, excluding:
Unless you live in California, the only way to apply for an Opportunity Fund loan is through LendingClub. Some states may require minimum loan amounts higher than the starting amount of $5,000.
Community Development Financial Institutions are eligible to receive federal dollars, money that may be used to make business loans and provide other types of investment, training and assistance to underserved communities.
Online business lender Funding Circle might be considered a LendingClub competitor — like LendingClub, it connects investors with borrowers. Funding Circle, however, is a peer-to-peer lender that focuses solely on small business loans.
Funding Circle business loans through LendingClub are available in all U.S. states except Nevada.
It’s important to note that Funding Circle business loans are secured. If you’re approved, you’ll need to provide some sort of collateral, such as accounts receivable, equipment, inventory, or vehicles. Funding Circle does not accept real estate as collateral, so your business will need to have something else of value that you can use.
When assessing your application, Opportunity Fund will also consider the potential impact of your business on the community. And while your personal FICO score is a factor along with savings and potential collateral, you may also provide character references or describe how you overcame past challenges.
Funding Circle, on the other hand, has tighter qualifications for its business loans. You’ll need to have at least two years in business, and none of the business’s owners could have had bankruptcies within the past seven years. Certain businesses may not be eligible, such as nonprofit organizations, dispensaries and “speculative real estate,” among others.
Although Funding Circle and Opportunity Fund are lenders in their own right, you may apply for these loans through LendingClub’s online business loans portal. You may need to provide:
If you are approved, LendingClub will show you your loan options. If you decide to go forward with one of the options, you’ll need to provide some additional documents. Then, if everything goes smoothly from there, funds will be deposited directly into your bank account. The entire process can take as little as 1-2 business days according to a LendingClub representative, although 5-7 is the average timeframe.
The advantage of LendingClub business loans is that fair-credit borrowers can apply online with two very different lenders in one place, and potentially receive lower interest rates than what you could find with other online lenders. LendingClub may even open up your application to companies on the Lendio marketplace, distributing your application to even more lenders.
Even so, if you need funds, it’s worth your time to shop around with additional alternative lenders, as well as banks and credit unions, particularly if your credit is strong. If your personal credit score is extremely poor, it is possible to find bad credit business loans.
Here are some similar lenders to consider in addition to LendingClub:
OnDeck is another lender with similar credit requirements (a FICO score of at least 600), but it’s for much larger-volume businesses (at least $100,000 annual business revenue). One of the things that sets this lender apart from LendingClub is that while it also offers 12-month term loans (plus business lines of credit), you’ll be expected to make payments on a weekly or even daily basis. However, time to funding may be faster than LendingClub — as fast as one business day. Still, OnDeck might be better suited to businesses with a strong daily cash flow, such as retail operations, versus a business with only a few large incoming receipts per month.
BlueVine is another popular online small business lender. If your business is newer, you might have a better chance of being approved with BlueVine because it only has a minimum time-in-business requirement of six months, compared to LendingClub’s 12 months. You will still need to be earning a fair amount, however — at least $10,000 per month. If, however, you are approved and everything sails through the underwriting process, you could receive your funds in as little as a few hours. BlueVine also requires weekly payments for its 6– or 12-month loans.