Accion Loans Review: Flexible Requirements for Startups and More

Applying for business loans often becomes a numbers game. Must have a credit score this good to qualify. Must have revenue this high to apply. Must have been in business this long to be considered. And if you don’t have the right numbers? You’re out of luck.

Accion does things a little differently. It still looks at the numbers, yes, but it has flexible loan requirements and an interest in getting to know your business. That means Accion often funds people that wouldn’t qualify for loans elsewhere—like startup businesses and business owners with bad credit.

Of course, there are some tradeoffs along the way. So before you apply to Accion, let us tell you all about this nonprofit lender—the pros, cons, and quirks you should know.

Plenty of lenders offer startup loans, but few offer them to really young businesses. Most lenders insist on seeing at least six months in business—and more often a year—before they’ll give you the time of day.

Accion, though, lends to brand-spanking-new startups. It doesn’t have any minimum time-in-business requirement, so even the youngest of businesses could get a business loan.

Now, you will have to meet some requirements to qualify. For example, if you’ve got a truly new business with little-to-no recent history, Accion will want to see that you’ve got another income source that will enable you to repay the loan. You’ll also need to show some revenue projections for your baby business.

But Accion has otherwise flexible borrower requirements. The exact numbers will depend on your business’s location, but Accion generally accepts a 575 personal credit score (a “poor” FICO credit score). And there are no hard and fast revenue requirements either.

That means that Accion loans can work well for all sorts of business—not just startups.
That’s assuming, though, that you’ve got some time. Because unlike some lenders that offer near-instant approval, Accion’s process takes days or even weeks.

Is it worth the wait? Let’s look at its financing options to find out.

You can only get one loan type from Accion: a term loan.

Fortunately, term loans offer enough flexibility to work for many business needs. So whether you’re buying equipment, hiring an employee, or increasing your inventory, Accion’s term loan can help.

Let’s dig into the details.

Accion’s loans start quite small―way smaller than most lenders’ loans do. And while you can ask for whatever loan amount you want, you should understand that you may not get that amount.

In fact, one of the ways Accion can fund businesses with less-than-perfect borrower qualifications is by offering them microloans. So yes, you can get up to one-quarter of a million dollars, but the average Accion loan size is about $12,000―quite a bit smaller.¹

If you absolutely need a large loan, Accion might not work for you. But if you can handle a small loan, Accion’s loans could end up being more affordable than its competitors’.

One thing we love about Accion? It doesn’t try to hide its loan costs. It publishes both its minimum and maximum APR (annual percentage rate). That lets you know both the best-case and the worst-case scenario before you apply.

And luckily, that rate range is pretty competitive. Sure, you might be able to find a slightly lower starting rate at traditional financial institutions (banks and credit unions), and some lenders will have a slightly lower maximum rate. But online lenders regularly have APR in the high 30s, 40s, and beyond, so Accion still sits in a sweet spot.

Plus, we like that Accion uses APR to describe its rates. As you may know, APR includes the cost of both your interest rate and your fees―it’s all-inclusive. With APR, you won’t be surprised when you have a fair rate but super-high hidden loan fees, because it’s all included in the rate.

(We know, for example, that Accion charges an origination fee.)

Of course, your specific interest rate and fees will depend on factors like your credit score, revenue, and time in business.

You don’t need any specific collateral to get an Accion small-business loan, but your loan will require a personal guarantee.

That means that if you stop making loan payments and default on your Accion loan, you’ll be held personally responsible for the debt. In other words, Accion can potentially go after your personal assets (including your house, car, and other valuables).

It might sound scary, but you shouldn’t worry. Most lenders that offer unsecured loans (loans you don’t need collateral to get) require a personal guarantee. And as long as you make your scheduled loan payments, your stuff will stay safe.

We mentioned before that getting an Accion loan can take a while. Why? Well, let’s look at the application process:

1. Submit an online (or over-the-phone) application.
2. Have a conversation with an Accion loan expert.
3. Compile and submit a full loan application.
4. Get approved.

That first step is easy. Just answer some questions about yourself, your business, and why you need a loan. It should take 15 minutes, give or take.

But after that, you’ll have to wait for Accion to reach out to you. This takes about two days. (By this point, some lenders would have already funded you.)

When you get the call from an Accion loan consultant, you’ll discuss your business and your financing needs in greater detail. Your dedicated loan expert will help you figure out if you’re likely to qualify for an Accion loan, how much money you’re likely to qualify for, and what you can do to create the strongest application.

Based on that conversation, you’ll create a complete loan application. You’ll probably need to gather plenty of documentation:

• Personal tax returns
• Business tax returns
• Business plans
• Bank statements
• Other financial documents

If you get everything together quickly, this part doesn’t have to take long. But if you have to ask your accountant to send stuff over or you have to come up with a business plan, it could take much longer.

When everything is together, you’ll submit your final loan application. It will go through underwriting (deciding if you’re creditworthy and can get the loan). With any luck, you’ll get approved and get your funds.

So as you can see, Accion’s lending process is a bit more complicated than the loan application process at say, Fundbox, which just connects to your business bank account to automatically make a decision.
If you need funding ASAP, Accion’s drawn-out lending process could be a dealbreaker. But if you’ve got the time, Accion’s personalized touch could help you get financing you wouldn’t get otherwise.

Accion’s flexible loan requirements mean that all sorts of businesses and business owners―including those from underserved communities―can get the working capital they need.

So if you’re a business owner who doesn’t qualify for traditional bank loans, you may still be able to get an Accion business loan. Even if you have a young startup, you may be able to get financing.

You will have to buckle up for a longer-than-average lending process, and you may have to settle for a relatively small loan.

All the same, the flexible loan requirements, competitive rates, and personalized loan help make Accion worth the wait.

Not sure you have time to wait for an Accion loan? Check out our list of the best fast and easy business loans to find a quicker option.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.