LendingClub Business Loans Review: Affordable Rates from an Often-Troubled Lender

Thinking about getting a small-business loan from LendingClub? It has a lot to offer small businesses, with its low APRs, relatively low application requirements, and monthly payment schedule.

But LendingClub isn’t all sunshine and low rates—you need to consider its sketchy past and its evolving lending model too. You also need to understand how LendingClub partners with Accion Opportunity Fund to offer loans.

In this LendingClub review, we’ll look at both sides: what makes LendingClub a good choice for small-business lending and what you absolutely must know before you apply.

Before we get into this review, take note: LendingClub isn’t actually the one offering you a business loan. It partners with Accion Opportunity Fund, and that’s the company giving you a loan. We’ll cover more about this and why it matters later, but first, let’s dig into your loan option.

LendingClub (through Accion Opportunity Fund) offers just one small-business financing product: a term loan. Now, that term loan can be a one-year $5,000 loan or a five-year $500,000 loan (depending on what you get approved for), so it does offer some flexibility. (But if you’re looking for lots of loan options, LendingClub isn’t the lender for you.)

LendingClub no longer lists its loan fees, but historically they came with a flat 5.99% origination fee. (A little on the high end, but not outrageous.) So do watch out for possible loan fees when you get a loan offer.

As an added bonus, LendingClub uses a monthly payment schedule, so you don’t have to worry about the weekly or even daily payment schedules many online lenders use.

Interested? We’ll tell you how to apply in just a minute. But first, some more about what we like―and don’t―about LendingClub.

LendingClub has one clear advantage over most online lenders: It offers low starting interest rates on its term loans―almost as low as the ones you’d find at a big bank.

But LendingClub also has a clear advantage over traditional lenders: it has much more relaxed borrower requirements.

While banks might ask for several years in business and more than $200,000 in revenue, LendingClub asks for just one year in business and $50,000 in revenue. And while reps told us you need about a 600 credit score to get approved for one of its business loans, that’s not a hard requirement.

In other words, LendingClub offers surprisingly affordable yet surprisingly accessible business loans. On paper, it sounds like a business owner’s dream. (Well, unless you have a very young business.)

But is LendingClub actually better than other business lenders?

LendingClub competes primarily with other online lenders. Here’s how it stacks up to four of our favorite alternative business lending companies.

First off, you’ll notice that LendingClub’s interest rate is―as we told you―pretty competitive. While it’s not the lowest rate out there, it’s not far off either (at least for online lenders).

Other lenders do offer more loan variety though, with most online lenders giving you at least a couple lending options. So LendingClub’s one term loan product may feel too restrictive in comparison.

And as far as borrower requirements go, LendingClub is pretty accessible. Its $50,000 revenue requirement is on the low side, and its one-year time-in-business requirement is fairly average. Though LendingClub doesn’t list a specific requirement, the 600 or so we’ve been told to expect still puts it on the low side for term loan products.

Much of what we’ve said makes LendingClub sound pretty good. But it actually has some big drawbacks you need to know about.

For starters, there’s the fact that LendingClub has just the one loan product. It should offer enough flexibility to work for various business types and needs, but we’d rather see options like lines of credit and other working capital financing.

Also, applying with LendingClub won’t get you funded as quickly as applying with, say, Fundbox. LendingClub doesn’t promise same-day or next-day funding. 

But the biggest catch? LendingClub itself. LendingClub has had a bumpy few years, from firing a CEO in 2016 to getting hit with a government lawsuit in 2018 to decide to abandon the peer-to-peer lending model that made it famous in 2020. (By the way, that government lawsuit was real bad. LendingClub was accused of lying to borrowers, double-dipping on payments, and more.)

This lender has changed a lot over the past few years, and it’s announced big changes ahead. The changes that have already happened over 2021 have positively impacted LendingClub's growth and profitability. With all that said, LendingClub’s history probably doesn’t matter as much as it used to―and that’s because LendingClub now offers business loans through Accion Opportunity Fund rather than doing its own lending. 

It’s time we talk about what that means.

As we just told, LendingClub has been through some big changes. So to make sure you understand how it works, we’re going to briefly explain how it used to work, how it works now, and how things might change in the future.

LendingClub used to operate on a peer-to-peer (P2P) lending model, which meant that it helped potential borrowers connect with individual investors. When we first reviewed LendingClub, it still worked this way.

Since then, LendingClub had slowed down its P2P lending quite a bit. In fact, it stopped offering P2P business loans at all. Instead, LendingClub started offering business loans in partnership with another lender, Accion Opportunity Fund.

While you could start a loan application on LendingClub’s website, you ultimately had to apply and get funded through Accion Opportunity Fund.

So why not apply with Accion Opportunity Fund directly? Well, it seemed that you could get larger loan amounts through LendingClub’s partnership than through Accion Opportunity Fund directly ($500,000 vs. $100,000). Likewise, when you applied through LendingClub’s website you got offered rates as low as 4.99%. On the Accion Opportunity Fund website, rates started a little higher, at 5.99%.

Of course, rates have gone up on LendingClub all the way to a minimum of 9.77% but back in the day, applying through LendingClub would actually get you a better loan than applying directly with Accion Opportunity Fund.

In February 2020, LendingClub announced that it was buying Radius Bank (now called LendingClub Banking). And in October 2020, it announced it was shutting down all peer-to-peer activity (including P2P personal loans) by the end of the year. Its plan? “[T]o offer a full suite of products as a bank,” according to its SEC filing.

Throughout 2021, LendingClub worked hard on focusing on growth realigning their goals to offer those same "bank-like" products. They were successful in consolidating the personal, auto refinance and purchase loans into one platform, acquiring and integrating the bank and accelerating membership acquisition.

In fact, LendingClub grew by 7% by the end of 2021 inspiring very positive projections for 2022. Now that we are more than halfway through 2022, LendingClub has set records for revenue and profitability. All this while the company gained two new board directors and a new chief financial officer in July 2022. 

The main thing to note that hasn't changed since 2020 is that LendingClub is still partnering with Accion Opportunity Fund and looks to keep that partnership into the future. 

We are optimistic about LendingClub's future. The company seems to be making smart moves to keep their clients and board happy. 

We have no idea if LendingClub plans on returning to P2P lending now that things are looking a bit more stable on their end. Most likely, they will not. 

Either way, it looks like LendingClub is finally in a solid place after a lot of turmoil. We have high hopes that the company will keep focusing and ensuring growth and good results. 

Now that you understand you’re technically getting a loan from Accion Opportunity Fund (in partnership with LendingClub), let’s talk about how the application process works.

You’ll start your application on LendingClub’s website by filling in a form that asks for your email address, how much money you want, and why you want a loan.

At that point, you’ll have to fill out a relatively brief application on Accion Opportunity Fund’s site that will ask for more details about you, your business, and your finances.

At the end of the application—which should only take a few minutes—LendingClub will decide if you qualify. If you do, it will show you loan offers, which might have different terms or rates. You can choose the loan offer that sounds best to you.

Now, this initial application is really a prequalification process. Once you qualify, you have to upload documentation to finish your application. Accion Opportunity Fund will give you a list of the exact documents you need to upload, but you can expect the usual:

• Bank statements
• Business tax returns
• Proof of income
• Proof of your identity
• Proof of your business’s identity and address

Once you submit everything, Accion Opportunity Fund will review your application. 

If any of that sounds confusing, don’t worry—Accion Opportunity Fund will assign you a dedicated client advisor to help you through your loan application process.  

Note that LendingClub doesn’t specify how long it takes to get approved or funded. It just says that you can get funding “fast.” Based on our knowledge of online lenders, we suspect that means you get approved and funded within a few days―but probably not the same day.

In theory, we like LendingClub business loans a lot. They have low starting rates, decently long repayment terms, and monthly payment schedules. Plus, they’re easier to qualify for than similar bank loans.

Still, we have some concerns about both LendingClub’s past and its future. With a history of sketchy lending practices and big changes ahead, LendingClub hasn’t proven itself to be the most reliable lender past the last year.

So should you borrow from LendingClub? Well, we’ve told you what you need to know. Now you have to weigh those factors for yourself. 

Miss LendingClub’s P2P lending? You might want to consider crowdfunding instead. Check out our guide to crowdfunding vs. P2P lending to see how they compare.

Now you know the deal with LendingClub, but we still have a few more things to talk about.

LendingClub used to claim that its entire application process—from submitting your initial application to getting funding—took an average of seven days. Now that it offers business loans in partnership with Accion Opportunity Fund, LendingClub doesn't specify a normal timeline.

We’d guess it still takes a few days. But fortunately, you have more control than you might think. If you’re prepared and prompt with all the required documentation (like bank statements and tax returns), you can probably speed up your approval and funding time. If you dillydally on documentation, however, you’ll drag out the application process. Your choice.

In addition to small-business loans, LendingClub has personal loans and auto refinancing loans. Note, though, that as of December 2020, you can no longer use LendingClub’s peer-to-peer marketplace as an investor rather than a borrower.

No, LendingClub is not going out of business. It is, as we discussed above, changing its whole model and becoming a bank―no more P2P loans. But LendingClub will still be around in some form or another.

We dug into the details about LendingClub, grading it on loan amounts, borrower requirements, customer reviews, and more. Because it partners with Accion Opportunity Fund to offer business loans, we looked into that company as well. After scoring LendingClub on many factors, we gave it a final grade and wrote this review.

Disclaimer

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