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Are you trying to keep your small business afloat but can’t get a bank loan? You’re certainly not alone — funding is one of the most stressful parts of owning and building your own business. But you don’t have to give up hope.
Online small business loans can be a viable option if you’ve come up dry with other funding sources. LendingClub loans are a popular choice for tons of small businesses. But how suitable are they for your business? Our comprehensive review digs deep to help you find out.
Note: Your chances are better of getting approved with online small business loan services compared to more traditional lenders, but these services will cost you — their interest rates are extremely high. However, if you’ve run out of options, or need funding immediately (and plan to pay it off quickly), an online loan is worthy of consideration.
- Pros & Cons
- Key Features
- How Do Borrowers Rate LendingClub?
- Pending FTC Actions And Loan Scam Alert
- What’s Our Final Verdict?
- How Does LendingClub Stack Up With Its Competition?
- Business must have at least $50,000 in annual revenue (lower than many)
- Can borrow up to $500,000 if qualified
- Lower APR average at 9%-35% (includes a 3%-8% origination fee)
- Flexible terms, from 1-5 years
- Dedicated U.S.-based client advisor
- Several days to find out what loans are available to you
- Must be in business at least 1 year
- Personal guarantee required
- No weekend customer support hours
- BBB accredited but not rated, perhaps due to a pending FTC investigation
- BBB accredited with A- Rating
- There are some pending FTC actions against the company
- More than $11 billion loaned to small businesses
- Peer-to-peer lending site, backed by a secure base of everyday investors (not large financial institutions)
- LendingClub rates: they have low APR rates compared to many other services we reviewed
- Offers small business loans from $5,000 up to $500,000
Check out what customers have to say about their experiences getting LendingClub business and personal loans.
Easy application process, good communication throughout, and the best interest rate out of the offers I received. Would recommend to anyone looking for a loan. – Morgan, Trustpilot 6/21/2022
I have borrowed from this lender twice and each time, it has been picture perfect. While no one wants to borrow to pay off debts, the fact that this company was willing to give me a chance proved to me that despite the hardship, they supported me even during this Pandemic. Of course the trick is not to get into debt, but when illness, job loss and decrease in salaries and IRS taxes for both middle and lower class people impacts, decisions have to be made in order to survive. – Laroi, Consumer Affairs 11/22/2020
Lending Club approved a loan for a dental procedure. The dentist office overstated the amount that would be authorized by insurance, Lending Club paid it in full before the work was done. Upon receipt of the EOB from Insurance that clearly shows the amount was considerably less I file a dispute within days of when the payment was made. It’s been 9 months now and they still have not provide help to resolve the dispute despite me contacting them monthly asking for help.– Robert , Consumer Affairs 6/4/2022
I don’t recommend Lending Club. I got pre-approved letters, I then applied and got denied. Not even for counteroffer. My credit score was above what they say is required, as well as my income. If I were you I would stay away from Lending Club. Many other options out there. – Josh, Trustpilot 5/17/2022
You have have noticed that we provided a con above of “pending FTC actions.” In some not so sweet news, here are the accusations against LendingClub filed by the FTC in 2018.
FTC vs Lending Club
On April 25, 2018, the Federal Trade Commission (FTC) filed a complaint against LendingClub Corporation, dba LendingClub. Case #: 3:18-cv-02454. The case is currently pending, last update on the case page was on January 18, 2022, as of this writing.
The FTC alleges that LendingClub promised consumers “no hidden fees”, but when the loan funds arrived in consumers’ bank accounts, hundreds to thousands of dollars were found short of expectations due to a hidden up-front fee that Defendant deducts from the consumers’ loan. The complaint also alleges that the company mislead consumers into thinking their loan had been approved, when Defendant knew many consumers would never receive a loan. Consumers then believed that funds were forthcoming and did not apply for credit with Defendant’s competitors. Other allegations include: continuing to charge consumers who cancelled their automatic payments or had paid off their loans entirely; and withdrawing double payments from accounts, as well as failing to provide consumers with privacy notices.
Lending Club Lending Practices Settlement
On September 27, 2018, Lending Club agreed to pay $2 million in civil penalties to resolve allegations that it violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1969 (FIRREA).
The settlement, with the Department of Justice stems from finding that between January 2009 to September 2010, Lending Club made misrepresentations to its FDIC-insured loan originator, WebBank. It is also alleged that due to the misrepresentations, WebBank originated over 200 loans to borrowers who did not satisfy WebBank’s credit requirements.
If you want the speediest turnaround on getting your loan funded, the LendingClub may not be your best bet since you have to wait for an investor to get on board with your loan request. However, if you don’t need funding immediately, LendingClub could be a good option for you, and could save you money in the long run compared to similar services.
See how LendingClub stacks up against other online lenders in our online small business loan comparison, where we’ve reviewed 11 of the top companies.
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