Businesses are generally in the business of making money. Whether for profit or not, the objective is to generate sufficient revenues to keep the proverbial wheels turning from day to day. Companies rely on a multitude of resources to manage operations, not least of which is capital. Human capital refers to the ‘entrepreneurial flair’, ‘ingenuity’, and ‘expertise’ that drives operations from day to day. And the other form of capital – the financial component is what facilitates operations to allow a business to run smoothly.
Cash is needed to make a business functional. It pays the salaries and wages, replenishes inventory, pays creditors, and facilitates marketing, advertising, and related activities. However, it is not always easy to come by that cash since businesses are often at the mercy of big banks and financial corporations vis-à-vis lines of credit. Fortunately, a niche market has opened up and has become a mainstream phenomenon. This is the new online lending market.
Who are the Stars of the Show in Online Lending?
Many heavy hitters are currently on the list, but it’s not so much the names as it is the services they offer to customers. For example:
- What are the borrower qualifying criteria?
- Is the lender registeredto offer online loans?
- How much are the origination fees for the loans?
- What are the terms and fees that need to be met?
- How long does it take before funding is received?
- How much can you borrow and at what interest rate?
- What is the application process like? In person or online?
- What are the prepayment penalties for early payments of loans?
- What is the professionalism and quality of customer service like?
The Lending Club Case Study
These are but a handful of the many criteria that need to be looked at by clients when they are applying for a business or personal loan. There are many industry heavyweights, including Lending Club. But before you simply accept the recommendations of the odd reviewer here or there, it’s important to assess the authenticity of these reviews. Clients are advised to only consider objective Lending Club reviews as they evaluate the services provided by this lender.
Lending Club was founded in 2006 and has become a staple in the online lending arena. At the time, it only offered personal loans but has since expanded its operations to include a range of business loans as well. Today, Lending Club is a business instalment loan provider. To qualify for this company’s loan requirements, it is important to meet the criteria. These include the following:
- The business must be at least 12 months old with revenue of $50,000 per year.
- No personal credit scores are specified, which means that there is a degree of leniency for borrowers.
- Lending Club does not accept clients who are not residents or citizens of the US and of legal age. Ownership of at least 20% of the business is required to get loan approval.
- Lending Club allows qualified customers to borrow from $5,000 to $300,000 in loans over a 1 – 5-year timeframe.
- The typical Annual Percentage Rate (APR) is 9.77% through 35.71%.
- For the most part there are no personal guarantees required. However, if there are loans above $100,000 a personal guarantee must be provided.
While applying for a line of credit, it’s entirely common for a US lender to request IRS documents, proof of income, and identity to valid your address and that of your business. There are typically loan origination fees levied on loans and its incumbent upon the borrower to be fully apprised of these loan fees. As soon as these fees have been taken care of then the funds are dispatched to your bank account. Be advised that preapprovals are not guarantees of approval and there have been rumours circulating about advance fee scams making their way through the markets with many online lenders.