Small business owners have more lender options than ever before. However, business loan lenders often require several months, if not years, of business history to qualify.
There are much fewer options for startup business loans. One riskier but still viable option is using personal loans to fund startup expenses.
LendingPoint is an online lender specializing in personal loans with lower qualifications than banks and much faster funding times. In addition, the online lender recently added some small business point-of-sale partnerships for companies to offer their customers term loans to pay for goods and services.
However, the online lender won’t work for every business or startup need. We can help you decide if LendingPoint’s options could work for your startup or sales process by covering the benefits, drawbacks, and application process.
Specifically, we’ll answer these questions and more:
LendingPoint offers loans and some merchant financing. It is a direct lender based out of Atlanta, Georgia. The company launched in 2016 as a personal loan lender and has since funded over $8 billion for consumers.
Personal loans are still the lender’s main product, but it has recently added small business merchant point-of-sale lending solutions. Small businesses can use the lending options to offer financing terms to customers.
The financing company offers personal loans, which could be used for business in specific situations. It also offers merchant point-of-sale financing.
Let’s review how both programs work.
Before we dive into using LendingPoint’s personal loans for business purposes, we should note that you should always separate your personal and business finances. Using personal loans for business carries increased risk.
The only time it might be advisable is when you’re an entrepreneur in the early startup stages and need fast access to capital to get your business going. We’ll discuss qualifications in the next section, but in addition to needing fast funding for starting a business, LendingPoint loans are geared towards borrowers with credit scores in the 600-680 range.
When first getting your company off the ground, your business won’t have the revenue history that most business financing options require. A small personal loan can help bridge the gap until you qualify for a business lender.
Outside of business purposes, most consumer borrowers use personal loan funds for emergency expenses, medical or dental bills, home improvement projects, debt consolidation, and more.
The online lender’s foray into small business provides merchant financing solutions. Small businesses can partner with LendingPoint to offer financing terms to customers at checkout.
The way it works is that LendingPoint offers an unsecured term loan for customers to pay for the goods or services. The lender pays you directly and then collects payment (principal and interest) from your customers.
Partners can offer the financing option with a link at the point of sale or by emailing the link. Customers can apply for financing, and LendingPoint handles the underwriting and approval process.
The program offers the following amounts: $500 – $20,000. It allows other merchants to sign up but is marketed explicitly to healthcare and contractors.
Healthcare clients include medical, veterinary, and dental providers. Patients can apply for the term loan to cover the costs of procedures, medicine, and more.
Contractor clients include those who provide exterior and interior home improvement services or maintenance and repair. Homeowners can use the loan to fund improvement or repair projects. Offering financing allows contractors to attract more customers and offer more services.
LendingPoint also offers a program for banks and credit unions to provide the company’s personal loans to their customers. Traditional financial services companies can obtain another funding source in their product suite.
The company doesn’t publish qualifications for its small business products.
Here are the qualifications for a LendingPoint loan:
The company doesn’t provide loans in Nevada or West Virginia. Its products are available in the other 48 states and Washington D.C.
When you initially apply, the company will perform a soft credit pull, which won’t affect your credit. If you decide to move forward with funding, the lender makes a hard credit inquiry during underwriting, which can impact your credit score.
While the online lender doesn’t set a minimum credit score, most online reviews suggest the company specializes in lending to individuals with a personal credit score in the 600-680 range.
The lender may charge an origination fee for personal loans ranging from 0% to 8%. The fee is based on your credit history, borrowing amount, and terms.
It will add the origination fee amount to your payback total. For example, if you receive a $10,000 loan with a 5% origination fee, the total repayment amount becomes $10,500. However, you can request that the $500 be deducted from your disbursement.
Since the company doesn’t offer business loans in the traditional sense, it doesn’t have a business loan affiliate program. ISOs and business loan brokers cannot offer the lender’s loan services to their small business clients.
The company does not provide an application for merchant point-of-sale financing or platform lending. Small business owners should complete the contact form to start a conversation with the lender.
Applying for a LendingPoint personal loan is quick and easy. You can start the loan process by filling out the online application or calling the lender to apply by phone.
Once pre-approved, you can select the funding option and repayment structure that works for you. The loan then moves to final underwriting.
During underwriting, you might be asked to provide the following documents:
If approved, the lender sends your funds to your bank account via ACH transfer within one non-holiday business day.
Your loan agreement will indicate your first payment due date and repayment frequency. You can set up automatic payments to avoid missing a due date.
If you pay off the loan early, the lender does not charge prepayment penalties. You can set up payments and make extra payments in the payment portal.
After six months of on-time payments, the lender may re-evaluate your loan and try to get a lower interest rate. In some cases, taking out a second loan with the company might be possible.
Small businesses that use this financing option have no obligation after receiving their payment. The loan service is between LendingPoint and your customers. You have no liability if the customer defaults on the loan.
The company’s merchant product allows businesses to offer financing options to their customers. Providing financing helps you attract more clients and close more sales.
LendingPoint’s personal loans can provide startup financing in some situations. The loans are easy to qualify for and quick to fund.
The most significant drawback is that the lender doesn’t offer business loans in the traditional sense. Its financing options are mainly its personal loan product, just geared towards a business’s customers to help them pay for goods and services.
Personal loans are also a risky way to finance a startup business. The lender’s origination fee is also quite steep.
Pros
Cons:
Yes, LendingPoint is a legitimate online lender for personal loans and some small business financing options. It’s Better Business Bureau (BBB) accredited and has an A rating on the watchdog site. The lender is also a verified company on Trustpilot.
LendingPoint has many reviews on sites like BBB, Trustpilot, Yahoo Finance, Credit Karma, and more. However, those reviews are all from individual consumers who received a personal loan offer from the company.
Since its small business financing options are new, we couldn’t find reviews about those products. Let’s go over what users said about the lender’s personal loans.
The company has primarily positive reviews. It has a 4.9 out of 5 rating on over 8,300 Trustpilot reviews. It has a 4.3 out of 5 rating on over 600 Wallet Hub reviews and a 4.6 out of 5 rating on over 1,400 Credit Karma reviews.
Most positive reviews discuss LendingPoint’s customer service team. Several users liked the low minimum credit score requirement.
There are also reviews praising the fast and easy application process. Users also like how quickly they receive their funds after loan approval.
In contrast to the positive reviews praising the customer service, some negative reviews come from customers that found the service lacking. We should note that positive mentions of customer service outnumber negative ones to such a degree that the negative comments should be viewed as atypical outliers.
Many of the negative reviews from customers were denied. Several received preapproval to only be denied during final underwriting. They were understandably upset at being denied after getting so far in the process and submitting documentation with sensitive personal and financial information.
Some customers felt the company applied aggressive sales tactics. There are also some negative reviews from customers who received messaging from bad actors posing as the company to gain access to personal information.
It should be noted that LendingPoint actively responds to negative comments and attempts to resolve any issues. When no resolution is possible, it explains why the situation occurred.
The LendingPoint underwriting process examines your credit and income histories. While it doesn’t set minimum credit score requirements, low credit scores could trigger a denial.
In addition, issues in your credit or employment history could also cause the company to deny you. Even if you were initially pre-approved, you could be denied during final underwriting.
If you were denied, you would receive an email regarding the decision, including how to request a statement of specific reasons. You can also call the lender for more information.
Fortunately, small business owners have many online lender options specifically dedicated to small business loans. Since LendingPoint’s personal loans shouldn’t be used as business financing except in specific startup situations, you will likely find much better business loan options for your company with an actual business lender.
You should be able to find an alternative lender or business lending facilitator that can offer the following small business loans:
LendingPoint is best suited for aspiring entrepreneurs willing to risk using a personal loan for startup costs. It could also be a viable option if you are a contractor or healthcare provider looking to offer financing options for your customers.
Established businesses with a funding need should seek a small business lender offering actual business loans. You also have other options for providing buy now, pay later options for your customers.
While the lender is a reasonable option for online personal loans, we cannot rate it as a business lender since it technically doesn’t offer business loans. Even its point-of-sale financing option is an unsecured personal term loan used to purchase goods and services. We highly recommend looking for other lenders for business financing options.
Disclaimer: The LendingPoint trademark is owned by LendingPoint LLC, and its use herein is for reference purposes only, and it does not indicate sponsorship or endorsement from LendingPoint LLC.
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