Lendio makes it easy to get matched with up to 75 business funding lenders and find the best business loan for your needs
Business lending hasn’t yet evolved as far as personal loans and mortgages. Funding for small business owners has mostly stayed within the small community banks, making it costly and time-consuming to find the best business loan.
That’s started to change with several marketplace lending websites, one-stop loan sites that match your business needs with dozens of lenders simultaneously.
Thinking about getting a business loan for my website business, I thought I would review one of the largest marketplace sites, Lendio.
What is Lendio?
Lendio is a lending marketplace website for small business owners. The website has partnered with a network of lenders that are available to fund business loans on different terms.
You’ve seen this lending model for mortgages and personal loans on sites like LendingTree and PersonalLoans.com but it’s relatively new for small business funding.
You fill out a loan application on the Lendio platform just as you would at a bank or on any other lender’s website. Instead of funding the loans itself, Lendio shares loan applications with its network of lenders which then compete on rates and terms for each loan.
You fill out one loan application and automatically get matched with up to 75 lenders.
This marketplace lending model is really the way loans are heading in the future because of its advantages.
- Saves time for borrowers, filling out one application at one website
- Leads to a better match with borrowers and lenders on terms borrowers can afford
- Leads to lower rates on loans because lenders compete for each application
- Lenders save by being online and not having physical branch location costs, savings they can share through lower rates on loans
While the Lendio marketplace model is attractive, it can be confusing and rates tend to be higher compared to other business loan platforms. Borrowers should check their rate on Lending Club as well which has higher loan requirements but typically lower rates.
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How does Lendio work for Small Business Funding?
Lendio offers one of the largest selections of business loan types I’ve seen including:
- Lines of credit is like a credit card where you get a limit to which you can borrow continuously. Loan terms are available for one or two years with monthly payments.
- Business credit cards work just like a personal credit card but in your company’s name to build credit. The loan is revolving and can even include a rewards program.
- Term loans are generally for established businesses for up to five years’ repayment.
- Equipment loans are best for companies with large capital expenditures like agriculture and manufacturing. Loan terms are for up to five years and up to $5 million in funding.
- Merchant cash advances do not require collateral and are one of the fastest business loan options with loan terms from three to 24 months.
- Accounts receivable factoring is a loan on your recievables, the sales you’ve made but haven’t yet collected. Lendio has lenders that will offer up to 90% of the receivable amount at rates lower than the typical cash advance.
- SBA loans – Lendio can help you get an SBA loan on terms from ten to 25 years including SBA 7a, 504 and Express Loans.
- Commercial real estate loans can help you buy, build, expand or remodel your office or manufacturing space. Loan terms up to 25 years and up to $5 million in funding.
Loan rates depend on the type of loan, the amount and the lender that funds your loan. My Lendio review and talking with a few borrowers found loans available up to $2,000,000 and rates from 7% up to 20% on short-term funding.
Since these are business loans, the application doesn’t go on your personal credit report and won’t hurt your credit score. Funding managers work with you to explain your loan options and select the best loan for your needs.
Lendio Review Business Funding Application Process
The Lendio application process was more detailed than I’ve seen with personal loan websites but that should be expected for two important reasons.
First, you would expect a loan application for small business funding to be more detailed. Unlike a personal loan where the lender can simply look at your credit report and ask some basic income questions, business loans require detail about the business which may not be available through a credit bureau.
As a loan aggregator, Lendio also needs to detail your case to find the lenders that are most suitable to your business funding need. It’s just as important to Lendio that you get the right loan for your business because it’s acting to match you up with lenders. If businesses suddenly started defaulting on loans because they weren’t matched correctly then lenders would stop using Lendio as a middleman.
Still, the entire business loan application process took less than half an hour to fill out. The application was a series of questions, one on each screen so borrowers don’t get overwhelmed. Questions include basic finances like monthly revenue, years in business, type of business, loan amount requested, business assets, why you need a loan and how soon you need the money.
With each question, Lendio automatically updates with how many lenders might be interested in your loan depending on their criteria. I ended up with 44 of the platform’s 75 available lenders competing for my loan.
After filling out the loan application, you create an account with basic contact information. You then see a general overview of the lenders interested in funding your loan and can click through to more detail on each loan.
Once you agree to a specific lender and terms, your loan is managed just like any other. You sign documents and get the loan funded. Most loans are on monthly payments though some are offered on daily or quarterly terms.
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Small Business Funding Insights and Help
Clicking through the Lendio website, you get a feeling for how the company is trying to create a one-stop for small business owners and help you succeed. Beyond the business loan funding, the site has several pages targeted to different topics for business owners.
The Lending Insights section follows small business and lending news. The page regularly updates with headlines and expert advice relating to small business. It’s a good place to keep up-to-date on the larger economic, regulatory and banking issues that could affect your business.
The Small Business Loans page is a guide into how to apply for loans, different ways you can use short-term and long-term funding and how to get the best interest rates. With the advice on small business funding and the marketplace model of shopping your loan around, Lendio is able to find lenders for more than 60% of the loan applications on the site.
The Business Credit page is a guide on why you need to start building your company’s credit record and how to do it right. Your business credit score ranges from 0-100 and only develops from accounts you have in your company’s name.
Lendio Review Summary for Comparing Small Business Loans
Lending marketplace sites like Lendio are a good tool for any small business owner. Not only do you save time with the loan application process but you get better rates and terms when lenders compete for your business.
Lendio has one of the largest networks I’ve seen for small business funding. The marketplace for business loans hasn’t yet developed like it has for mortgage and personal loans so the opportunity to shop your loan to 75 different lenders at once is a big plus for the site.
The pages of insight and advice are a good addition to the site’s lending platform. Lendio is building a one-stop resource for business owners for understanding credit and funding needs.
What I liked about Lendio
- Large network of lenders means almost any loan can be matched and funded
- Free and fast application process that won’t affect your personal credit score
- Free guides and resources to help business owners understand credit, lending news and how to get the best rates
What I didn’t like about Lendio
There were a few things I found and Lendio complaints I heard from other borrowers. Most of the complaints revolve around loan requirements and the difficulty for newer businesses to get loans. This is fairly common with most lenders requiring a few years of financial operations and monthly revenue.
- Lendio recommends businesses have at least $10,000 a month in sales, been operating for more than six months and that borrowers have at least a 550 credit score
- Some loans may require further documentation and funding delays have occurred on a few loans according to borrower complaints
I was overall happy with what I found during my Lendio review. The business funding website offers a simple, one-stop for borrowers to connect with up to 75 lenders and get a better match on business loans. Interest rates are competitive, if not a little below other lenders I’ve reviewed, and the platform offers a lot of resources to help you better understand business credit and lending. The application process is relatively quick and doesn’t go on your personal credit report, always a plus when shopping around for a business loan.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.