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 you’re looking for lots of loan options, LendingClub isn’t the lender for you.)

As we already said, the real selling point for LendingClub’s term loan is the interest rates. They start at less than 5%, making them comparable to many traditional banks.

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 deciding 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. That means that the LendingClub we’re reviewing today may not look like the LendingClub of 2022.

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 has slowed down its P2P lending quite a bit. In fact, it no longer offers P2P business loans at all. Instead, LendingClub now offers business loans in partnership with another lender, Accion Opportunity Fund.

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

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

So applying through LendingClub might actually get you a better loan than applying directly with Accion Opportunity Fund.

That said, you probably shouldn’t count on LendingClub’s partnership with Opportunity Fund lasting forever. 

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.

We don’t know exactly what that means for LendingClub’s business loans yet. But given that many banks offer business loans, and LendingClub is becoming a bank, we won’t be surprised if LendingClub starts offering its own direct loans.

At any rate, we’ll keep an eye on LendingClub, and we’ll update our review as more changes happen.

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.

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.

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.

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

Yes, LendingClub is legitimate. As we noted above, tons of customers have used and loved LendingClub. Now, LendingClub does have a colorful past that we think borrowers should know about (as we discussed earlier), but it’s a real lender that offers real loans. It’s not a scam.

LendingClub loans under $100,000 are unsecured and do not require any kind of collateral. Loans of $100,000 or more require a blanket lien on your business assets as collateral.

All LendingClub loans do require a personal guarantee—basically, if you end up defaulting on the loan, your personal assets are on the line. That might sound scary, but personal guarantees are pretty standard. As long as you don’t default, you don’t need to worry about it.

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.

Disclaimer

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