Last year, we reviewed Lending Club’s business term loans. It offered reasonable terms with an efficient application process. It was a great alternative to a bank loan if you can’t get one or are short on time. It has been a while and we decided to revisit the application and see what has changed in the past year.
Rates and Fees
Lending Club made quite a few changes in the past year including
- Raising the max borrowed amount from $100K to $300K, which benefits solid businesses who are looking for growth capital but have trouble getting the capital from banks.
- Widening the APR ranges with new origination fee 0.99% – 5.99% and interest rate 5.99% – 25.99%. This results in APR between 8-32%
In the past year, Lending Club also inked tons of partnerships for originating business loans including Alibaba, Sam’s Club, Opportunity Fund, etc. We imagined all these partnerships also helped expand their credit box. In other words, more business owners will be eligible for a Lending Club business loan compared to a year ago. If you have a solid business but were previously turned down, it might be a good time to try to apply again!
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First, I requested a $50K working capital loan using the same attributes as the LC review we did last year.
Next, I entered my business information
and personal information.
Next, I put in my (fictional) personal and business financial information.
Boom! I got a loan offer! For a 2 year loan, the interest rate is 14.9% with 5.49% origination fee!
This is more expensive than the 9.9% interest rate with 3% origination fee I got last year as shown below!!! I suppose they adjust the cost higher for some business owners learning from the loans they made in the past year.
Using the Nav APR loan calculator, I can see that the APR went from 12.49% last year to 20.73% today while the total financial cost went from $6,818.54 to $10,871.98.
I picked the $50K two year loan and entered my business tax id.
I then entered my business checking account information.
Next it showed me a short to-do list.
I clicked on the “Upload documents”. The document list is very short. Basically 3 months’ bank statements + business tax returns + Form 4506T. Compared to Funding Circle’s document requirement of 6 months bank statements + business/personal returns + business debt schedule, the list is even shorter!!
I verified my email account. The last step is to verify my business bank account after LendingClub deposited a small amount to my bank account.
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Lending Club’s business loan application is very simple. You should be able to complete it within minutes and you would get an instant rate quote if qualified. In our example above, the APR is a lot higher compared to last year. It’s unknown whether they raise the rates/fees for all borrowers across the board or just a portion of it. We actually have a real borrower who got a $300K Lending Club Business loan with 9.9% interest rate and 3% origination fee. Given their simple application instant rate quote, the best way to find out your rate will be to apply for it. Their product is very reasonable and is great for solid businesses who can’t wait to get a loan from a bank.