As a small business owner, you have more business financing options than ever with the number of alternative lenders available. While that’s good, researching and applying to various lenders can take significant time and effort.
Lending marketplaces like Lendio reduce the time and stress of finding lenders by matching your application with its lender partners. It offers many lending options with different qualifications through its network of 75+ lenders.
However, the costs could run high depending on the Lendio business loan and lender. This review covers the pros, cons, and how to apply to help you decide if Lendio is the right fit for your business.
Specifically, we’ll answer these questions and more:
Lendio is a one-stop-shop business lending marketplace that connects prospective borrowers to its network of lenders. Due to working with multiple lenders, it can help you apply for various small business loans and receive various loan offers if you qualify.
The company is known for its fast application and quick turnaround time on loan decisions. It offers access to small business loans that meet most business needs, including SBA loans.
Lendio is not a direct lender, so you won’t know your rates or terms until you apply and receive offers from its lender partners. However, it helps you streamline finding a lender with its one-to-many application process.
Its service is free, so there is no cost to apply. Lendio receives compensation from lenders when it successfully finds you funding.
The Utah-based business loan marketplace launched in 2011 (previously FundingUtah in 2006). Since then, it’s helped small business owners access more than $12 billion in funding with over 300,000 loans.
Applying to Lendio matches your application to lenders that you’re most likely to qualify for and loan options that best suit your needs. It offers a suite of financing products through its lender network.
Here are the available Lendio business loans.
Terms loans are the closest alternative lending product to bank loans. You get a large sum of money upfront and repay it plus interest in fixed payments. Lendio business term loans carry daily, weekly, or monthly payments.
You can use the funds for working capital needs, purchasing or upgrading equipment or software, business acquisition, etc. These loans are best suited for financing a large one-time project or business need.
Short-term loans are a sort of express version of term loans. You get a lower borrowing amount, and the repayment terms are much shorter.
However, they’re slightly easier to qualify for than traditional term loans. Lendio indicates that while the average funding time is 3-10 business days, you could sometimes get your funds within 24 hours.
A business line of credit gives you an available credit limit to draw funds as needed. This type of financing is excellent for ongoing projects, seasonal businesses, and covering unexpected expenses.
Lendio offers both revolving lines of credit and non-revolving lines of credit. A revolving line of credit is like a credit card. Your credit limit replenishes as you pay back what you draw.
A non-revolving line of credit expires once you’ve drawn all funds from the credit limit. Since it is not ongoing, non-revolving lines of credit tend to have lower rates.
A business cash advance, or a merchant cash advance (MCA), provides a large sum upfront, repaid with a percentage of your future sales. This form of financing is more accessible for borrowers with bad credit and provides quick funding.
Merchant cash advances are technically not loans. Instead, the financing company is purchasing a percentage of your future income.
The legal technicality allows MCA companies to avoid some of the regulations governing loans, which enables them to offer the financing product to businesses that can’t qualify for a traditional loan.
Accounts receivable financing, also called invoice financing, turns your unpaid invoices into an immediate cash advance. This form of funding is suitable for companies that experience cash flow interruptions due to the delay between delivering goods or services and receiving payment for them.
The way it works is that the financing company, aka factoring company or Factor, issues a cash advance based on the invoice’s value, typically 80%-90%. When your customers pay their invoices, it goes directly to the factoring company.
Financing companies charge a factoring fee for the service, which is usually a percentage of the invoice. The factoring fee is sometimes called a discount rate because the company essentially purchases the invoices at a discount.
The factoring fee is typically based on the credit terms extended to your customers. Net-30 terms (invoice is due in 30 days) will have a lower factoring fee, usually around 3%. Longer terms, like net-60 or net-90, will carry higher fees.
Once the factoring company receives payment from your customers, it issues the remaining invoice amount minus the fee. Since repayment comes from your customers, factoring companies are typically willing to work with newer businesses with low credit scores if your customers have a high credit rating.
Equipment financing allows small businesses to acquire needed equipment on credit. Business equipment includes everything from construction to medical office equipment to computers, software, and office furniture.
Lendio offers equipment leases or loans with its financing program. This form of asset-based financing uses the equipment as collateral. This is known as a self-collateralized loan, similar to a car loan or mortgage.
Lendio can connect you to SBA-approved lenders. SBA loans are often considered the best small business loans available.
The US Small Business Administration (SBA) oversees the program. The federal government agency sets rules for lenders to follow, limits interest and fees, and partially guarantees up to 85% of the loans.
The backing from the SBA lowers the lender’s risk, allowing it to offer higher loan amounts at lower rates and extended repayment terms. Lendio offers SBA 7(a) loans, which are the most common and versatile loans in the program. It also offers SBA 504 loans and SBA microloans.
A commercial mortgage is a loan to acquire, develop, renovate, or refinance a commercial property. Companies use these loans for retail stores, warehouses, factories, and more.
Most Lendio business loans require between six months to two years in business, but startup loans only require three months. Startup loans include term loans, lines of credit, and business credit cards.
Businesses can use these loans to acquire another company, whether it’s a competitor, supplier, franchise, or others.
The specific qualifications for each loan depend on the lender. However, Lendio provides some basic requirements for some of their loans.
Most loans have a minimum credit score requirement, but some don’t. Your annual revenue and time in business are also qualifying factors. The lowest-cost options typically have a higher credit score requirement.
Business Term Loan:
Business Lines of Credit:
Equipment Financing:
SBA Loans:
Commercial Mortgages:
Startup Business Loans:
Business Acquisition Loans:
It doesn’t list minimum requirements for accounts receivable financing or business cash advances. That’s because repayment comes from future revenue, whether future sales (merchant cash advances) or when your customers pay their invoices (accounts receivable factoring). In both cases, your personal credit score and time in business matter less than the reliability of your customers.
The company shares your information with its lending partners, which could lead to you being contacted by third parties in the future. If you are concerned about privacy and protecting your business information, you may want to consider a different lending option.
While the company offers a convenient application and fast decisions, funding times can take longer than other alternative lending options. Some products can provide funding within 24 hours of approval, but the average is 3-10 business days.
While the Lendio website advertises a quick application process, the one aspect that could delay the process is the required documentation. Lendio has more documentation requirements than most alternative lending options.
When you apply, the company only performs a soft credit check, which won’t affect your credit. However, after you accept an offer from one of its lending partners, that lender may perform a hard credit inquiry during underwriting, which will impact your credit score.
Alternative lending options like Lendio tend to be more expensive than traditional lenders like banks and credit unions. That’s because these services are more convenient, with faster funding times and lower qualifications. However, you won’t know your exact rates and fees until you apply and receive funding offers from lenders.
Lendio offers a referral partner program. It is a lending marketplace and not a brokerage, but loan brokers can partner with the company to offer its lending products to their SMB clients.
The application process is quick and easy. Visit the Lendio website and follow these steps to apply:
You will answer basic questions about yourself, your business, and your funding needs. Most estimates suggest it only takes about 15 minutes to complete the application.
A Lendio representative called a funding specialist will contact you to discuss your business and needs. You might have to provide additional documentation depending on the loan you want.
Lendio will send you offers from lenders that match your request and qualifications. Compare the offers and choose the loan offer that best suits your needs.
The lender you choose to work with will finalize the loan process. Depending on the loan type, you could receive your funds within 24 hours to several weeks.
The repayment structure can vary significantly depending on the loan type. SBA loans will carry fixed monthly payments. Term loans can be daily, weekly, or monthly. Most business cash advances are daily or weekly payments.
Some products, like merchant cash advances, use a factor rate instead of an APR. Factor rates are a fixed percentage fee. There’s no way to save on interest if you pay it off early.
Factor rates are typically expressed as 1.1-1.5. Multiply the advance amount by the factor rate to see your interest. For example, if you borrowed $250,000 at a factor rate of 1.2, the formula would be:
$250,000 x 1.2 = $300,000. You’d pay $50,000 in interest. It can be an expensive way to borrow money. Some products will also have a prepayment penalty if you pay them off early.
You’ll repay most loans with an automatic clearing house (ACH) transfer from your business bank account. The exact rates, fees, and repayment structure will depend on the lender and loan product you match with.
The company provides a convenient online application you can complete in minutes. It then takes your application and sends it to the lenders in its network of 75+ lending partners, where you are most likely to qualify. This process saves you significant legwork and stress trying to find a lender.
Due to the number of online lenders it works with, Lendio can offer over a dozen financing programs and high borrowing amounts. The qualifications are typically lower than banks.
You can get prequalified on the same day you apply. Qualified applicants also get a dedicated funding specialist to assist with the process.
Unlike some alternative lending sources, you can get long-term financing. Examples include the extended payment terms available with SBA loans, term loans, and commercial mortgages.
While the application process is quick, one caveat is that there are usually exhaustive documentation requirements. The rates and fees on some products can be expensive, but you won’t know your costs until you apply and get matched with lenders.
The time to receive your funds can take a while, depending on the loan type. While Lendio is generally faster than banks, it can be much slower than other alternative lending options.
Pros:
Cons:
Yes, Lendio is a legitimate online business loan marketplace. The Better Business Bureau has accredited the company since 2021, where it has an A+ plus rating.
Lendio will only perform a soft credit check when you apply, but the marketplace may match you with a lender that will do a hard credit pull during underwriting.
Lendio has an excellent online reputation, but there are some negative reviews. The company has a 4.8 out of 5 on over 20,000 customer reviews at Trustpilot. On the BBB website, it has a 2.72 out of 5 rating with 120 reviews.
Positive reviews broadly discuss the customer service team’s knowledge, courtesy, and professionalism. Multiple users mention their funding specialist by name and praise the attention and dedication they receive.
Another common theme in positive reviews is the ease of the application process and the lower qualifications. Several users mentioned being able to grow their business due to the ease of qualifying and fast funding time.
There are multiple negative reviews regarding the costs involved. Several say they were charged exorbitant fees and high-interest rates. Others complained about prepayment penalties when trying to pay the loan off early.
Some negative reviews discuss delays in receiving their loan funds. Others mention that the lender they matched with didn’t meet their needs. Another recurring complaint was about hard credit inquiries from lenders despite believing they would only have a soft credit pull.
While the positive mentions of the customer service experience far outnumber the negative ones, several customers complained about being unable to reach someone or feeling their representative was rude. One of the more common negative complaints was Lendio providing their information to lending partners, who then contacted customers with aggressive sales tactics.
While Lendio’s qualifications are less stringent than traditional lenders, they can be higher than some alternative lenders. Online reviews suggest the company has about a 60% approval rate for businesses that apply.
Common reasons for denial are not enough business history, low revenue, or a low credit score. If you were declined, the denial letter should state the reasons why. You can contact Lendio if you have more questions.
The company also states it offers accounting software tools to help improve business finances and guidance on boosting your credit score. However, it does not say how long it will take before you can apply again.
Fortunately, many lending options exist if Lendio doesn’t work for you. If you struggle to qualify for a loan because of a low credit score, you can apply for a bad credit business loan.
Most alternative lending facilitators (like UCS) can help you find funding programs that meet your needs and qualifications. You should be able to find the following:
Lendio is best suited for small business owners who don’t know what funding they need and want to explore their options across lenders. The lending platform is also good for businesses that want to work with a reputable company.
If you are concerned about privacy or want to do your own lender research, Lendio is probably not the best option. In addition, businesses with excellent credit, high annual revenue, and more than two years in business could likely find less costly financing options.
However, the easy application and variety of lending products make Lendio an attractive option. The company works with vetted and highly reputable lenders.
Based on user reviews, available products, and its lender network, we rate Lendio at 4.3 out of 5. The company is worth considering if you need a small business loan, but you should be prepared for potentially high costs and your information going to third-party companies.
Disclaimer: The Lendio trademark is owned by Lendio and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Lendio.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
