If you are looking for a loan for your small business, there are other places to consider besides the traditional option of your local bank. One of these is peer-to-peer lender Lending Club.
The company steps in when banks are reluctant to make small loans to their customers. Lending Club’s approach gives individuals and financial institutions the opportunity to compete to offer loans to borrowers. The company has been offering individual loans for some time. But more recently, Lending Club has also expanded into offering loans specifically tailored to small businesses. Lending Club CEO Renaud Laplanche tells Bloomberg:
“It’s part of our strategy of being more useful to more people and expanding our product line and eventually offering all types of credit.”
Lending Club says it allows businesses to apply online with no impact on credit score. On the small business page of the company’s website, Lending Club says loans are available for up to $100,000. That’s higher than the amount generally available for personal loans. If you qualify, you may receive more than one loan offer. Choose the one that suits your business the best, and the money will be made available to you within a few days.
The fixed interest rate starts at 5.9%, according to Lending Club’s website, so you shouldn’t have to worry about it going up while you are paying it off. The site also says Lending Club gives businesses the opportunity to either pay the loan out over several years or prepay it early to reduce interest rates without penalties or other fees.
The company also says it allows perspective lenders to discuss options with a dedicated client adviser. To learn more about the small business lending program before applying, you can call 855-846-0153 or email the company at business@lendingclub.com.
As mentioned earlier, Lending Club does offer more than just business loans. The company also offers personal loans of up to $35,000 with varying interest rates depending upon credit. More than 250,000 people have taken out over $4 billion in personal loans through Lending Club so far, the San Francisco Chronicle reports.
The company recently raised $65 million from T. Rowe Price Associates, Inc.; Wellington Management Company, LLP; BlackRock and Sands Capital and borrowed another $50 million to expand its offerings, TechCrunch reports.
The idea of peer-to-peer lending is great, but I hope that it doesn’t get overtaken by scammers looking to make a few bucks and bail.
Aira Bongco
I was thinking the same thing. While the offer may be attractive, it is also prone to scammers. After all, there will be no impact on credit score – thus, there will be no consequences. Will the company last if it is like this?
Hoon Joo
Not true. Each LC loan is an unsecured installment loan, and will be reflected as such on your credit. Miss a payment, and you will get a delinquency on your credit report. Miss enough, and you will have a collections record, most likely with a recovery agent (i.e. repo man) coming after your a$$ after 180 days — or a big fat charge-off record. All of these negatively impact your credit score.
Jay Sendhav
P2P lending is growing at nearly 200% annually. These shops are opening up almost everywhere, e.g start up harMoney in New Zealand.
Financial sector has always been heavily regulated. And Banks have proven time and again that they do need high level of regulation. However, positive regulatory enforcement coupled with strong risk mitigation techniques is the only way to success for P2P players.
It would give borrowers an opportunity get better Terms on loans. It is yet to be seen how well these institutes strike a balance between interest of Lenders and Borrowers.
Chris Young
Nice article – but I’m a little confused as to what has changed. Lending Club has been in business loans for a while – as the article states – and from the headline I expected something about how their program has changed.
Or have I missed something?
Chris
Shawn Hessinger
Hi Chris,
No, you haven’t really missed anything. The Lending Club program continues to be tweaked. The company has been planning to enter the business loan market for at least a year, and has been phasing that program in for the last few months, with an initial pilot program to test the process. From our understanding, one of the key differences is the business financials that need to be entered — in addition to the personal information Lending Club has always required for their other loans. But until very recently that process has not been finalized. Another difference has been the size of the loans vs. personal borrowing. While we suspect people have probably been using personal loans for quite some time to cover very small business expenses, this really represents Lending Club’s formalization of the process. Thanks for the comment!
julius
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