Lendio Review: Business Loan Marketplace

Pros

• Borrower qualifications are lower than banks
• Multiple types of financing are available
• High borrowing amounts
• The application process is fast and easy
• Customer service is helpful

Cons

• Rates can be expensive
• Funds can take a while to disburse

What Is Lendio?

Lendio is a business financing platform that matches customers to lenders. Lendio does not originate loans directly but instead works with a network of 75 business lenders. With one application, Lendio does most of the work of finding funding for you, and there is no cost for this service. You may receive multiple loan offers from big-name funding partners, including Kabbage, OnDeck, Amex, and Fundbox.

Customers report that Lendio’s customer service is responsive and helpful, and the application process is fast and easy. If you’re new to the alternative lending market or just want an easy way to compare loan offers, Lendio is a good place to start.

Services Offered By Lendio

Lendio is a business loan marketplace. Provide information about yourself and your business, and Lendio will help you find lenders for which you’re eligible.

The availability of specific products depends on various factors, such as your credit score, the industry you work in, how long you’ve been in business, and your business revenue. Additionally, loan terms vary between Lendio’s partner lenders.

Loan options available through Lendio include:

• Short-Term Loans: A short-term loan is an installment loan with a term that usually lasts less than a year. Borrowers are charged a flat fee rather than the typical interest rate. Repayments are made daily or weekly.
• Term Loans: Term loans are classic loans where borrowers are provided a lump sum in exchange for a promise to repay the amount borrowed plus accumulated interest. Term lengths vary. Payments are made monthly, weekly, or daily.
• Merchant Cash Advances: The lender purchases a percentage of your future card-based sales in exchange for a lump sum with a merchant cash advance. The lender collects repayment by withholding a percentage of your daily card-based sales.
• Lines Of Credit: Rather than giving you a lump sum, the lender establishes a credit limit that you can borrow against. You can draw on your line of credit repeatedly as long as the total drawn amount doesn’t exceed your credit limit.
• Lendio SBA Loans: The Small Business Administration partially guarantees term loans and other products. Lendio SBA loans are more favorable than other loans when it comes to term length, interest rates, and maximum borrowing limits.
• Equipment Financing: Equipment financing consists of loans and leases designed to purchase tangible assets. If you have poor credit and need equipment financing, Lendio is one of our top-rated lenders for startups with bad credit.
• ERC Funding: When it comes to ERC funding, Lendio now offers one of the best employee retention credit funding services to help your small business file for the ERC credit on your tax return

Lendio can connect borrowers with nearly any type of funding, from short-term options to long-term SBA loans with high borrowing amounts. Lendio even has a mobile app that makes it easy to apply for funding on the go. Because its offerings cover nearly any situation, we’ve rated Lendio a perfect 5-star rating for its services.

Borrower Qualifications

Any business can apply for Lendio’s services. Unfortunately, there’s no guarantee that you will receive funding; according to Lendio, only six out of ten businesses get approved for a business loan through its service.

Because Lendio works with 75 different entities, ranging from lenders specializing in startup business loans to banks and SBA lenders, your business does not have to meet any specific requirements to qualify for this service. For this reason, we’ve rated Lendio a 4.9/5 for borrower requirements.

Nevertheless, you’ll have an easier time getting approved for a loan through Lendio the longer you’ve been in business, the better your credit rating is, and the larger your monthly revenue flow is. Some options may also require collateral.

Rates & Fees

Lendio is refreshingly transparent regarding rates and fees, disclosing borrowing amounts, possible term lengths, and ranges of interest rates for each product. This transparency, along with no prepayment penalties for many of its partners’ products, reasonable fees, and flexible repayment terms, led to our 5-star rating for Lendio’s rates and fees.

Lendio does not charge a fee for its service. Instead, Lendio’s revenue comes from its partner lenders. Per Lendio’s FAQ:

Lendio does not charge you to be matched to a potential lender. The offers that appear on the site are from companies from which Lendio receives compensation.

Loan terms vary depending on the partner funder you’re working with. These charges may include:

• Interest: Interest is the main cost of borrowing and is usually expressed as a percentage of the loan amount you borrowed. This number may be confusing because different lenders may cite a daily, weekly, quarterly, or annual interest rate. Make sure you know which one you’re looking at.
• Fixed Fee: Some alternative lenders, especially those offering short-term loans and merchant cash advances, may use a fixed fee rather than an interest rate. A fixed fee is expressed as a percentage of the amount you borrowed or as a decimal multiplier. If you borrowed $10,000 at a 20% fee (or a 1.2 rate), you’d owe $12,000. While easier to understand than interest rates, be careful with fixed fees, as they can often be more expensive.
• Origination & Administration Fees: These are fees that may be charged by the lender in addition to your interest rate or a flat fee — they represent the “cost” of processing and managing your loan. These fees might not be disclosed upfront, so be sure to ask your lender about them. These fees may be flat or a percentage of your loan amount.
• Prepayment Penalties: Some lenders may charge a fee if you pay off your loan early. If you’re thinking about doing so, make sure you’re working with a lender that doesn’t charge this fee.
• Other Fees: More types of fees? If you can think of it, there’s probably someone who charges for it. For example, some lenders may charge fees for processing certain types of payments.

Learn more about common fees for small business loans. For fees charged by a specific lender, check out our small business loan reviews.

Additionally, Lendio offers general information about what loan terms to expect by product type.

Business Lines Of Credit

Here are the terms you can expect for a business line of credit through Lendio.

Lines of credit grant businesses more flexibility than they’d have with a loan. They come in two different forms: revolving and non-revolving.

Revolving lines of credit function a bit like credit cards. You can draw on them in small or large amounts up to your credit limit, and you only pay interest on the amount of credit you’ve used. As you pay off your debt, that credit becomes available to use again.

Non-revolving lines of credit are nearly identical, but the credit is a one-time deal. After you pay it off, it doesn’t become available for use again. Typically, revolving lines of credit have higher interest rates than non-revolving lines of credit.

The convenience of a line of credit generally comes at a premium, often in the form of recurring administrative fees (monthly or annually) or draw fees. Otherwise, you’ll pay off your line of credit like you’d pay off a term loan. Some lenders may even allow a grace period on your business credit before you need to start making payments.

SBA Loans

Here are the terms you can expect from an SBA loan through Lendio.

Businesses that qualify can get an SBA-guaranteed loan through one of Lendio’s partners. These loans tend to have lower interest rates and longer terms than the ones newer small businesses may otherwise be able to access.

There are several different types of SBA loans, the most common being general 7(a) loans and CDC/504 construction and equipment loans. You may find additional types circumstantially useful, such as disaster loans.

Be prepared for a longer approval process if you apply for an SBA loan since you’ll have to satisfy the substantial SBA loan requirements. Some lenders may offer SBA Express Loans, which can expedite the process a bit — it’s still not super fast — at the cost of a lower maximum borrowing amount. Borrowing through a preferred lender will also speed up the process.

Short-Term Loans

Here are the terms for short-term loans through Lendio.

A short-term loan comes in handy if you need working capital fast, especially if you don’t have great credit. These loans typically have expedited and simple application processes, with funds reaching your bank account in a day or two if you’re lucky.

However, be aware that most short-term loans have to be repaid daily or weekly through an automated withdrawal from your business bank account. Short-term loans usually don’t accumulate interest like other term loans. Instead, you’ll pay a fixed percentage fee. While this fee is easy to wrap your head around, it can disguise just how expensive the money you’re getting is.

Due to the fixed-fee structure, you don’t have to worry as much about prepayment penalties, and in some cases, you may be able to reduce the amount of money you owe by paying off your loan early. Usually, lenders that allow this will be pretty upfront about it, but be sure to ask if you anticipate paying off your loan early.

Because short-term loans often rely on high interest rates and the laws governing interest vary from state to state, individual lenders may or may not offer them within your state. If they do, the supplemental fee structure may vary from state to state.

Business Term Loans

Here are the terms for business term loans through Lendio.

Business term loans are similar to traditional bank loans. They accumulate interest and feature regular, recurring payments. These payments may be monthly, weekly, or daily. In many cases, payments will be automatically deducted from your business checking account through an automated clearing house (ACH) or a similar service.

Depending on the lender, you may have to provide collateral or sign a personal guarantee. These allow the lender to claim or liquidate the asset you put up to recoup some of their loss should you default on your loan. Be sure you understand what you’re putting up for the loan, especially in the case of unsecured loans, which don’t use traditional collateral.

Personal guarantees might be a little confusing if you haven’t encountered them before. A personal guarantee allows the lender to come after your personal and business assets should you fail to keep up with payments.

Since term loans last a bit longer, and your financial situation may change, be aware of factors such as prepayment penalties.

Merchant Cash Advances

Here are the terms for merchant cash advances made through Lendio:

A merchant cash advance resembles a short-term loan but differs in some important ways. Technically, you’re not borrowing money; you’re being paid for a claim on your future credit card receipts. This loophole allows lenders to skirt many regulations governing business loans. Depending on how badly you need the money, this can be a good or bad thing.

MCAs are a costly way to get funding for your business, but they tend to have very low credit score qualifications. Like short-term loans, the interest rate associated with MCAs is a fixed fee. That fee may be expressed as a percentage or as a decimal multiplier (1.18 instead of 18%).

Unlike loans, MCAs don’t have definitive term lengths. Instead, your lender will collect a percentage of your daily credit card sales until the advance has been paid off. If you’re doing really good business, you’ll pay your MCA back more quickly. On the other hand, if you’re having a rough quarter or two, your MCA can drag on for quite some time.

Equipment Financing

Here are the terms for equipment financing through Lendio:

Equipment loans, despite sharing many traits with a business term loan — regular payments, interest — are handled differently than loans used for working capital.

When you’re borrowing money to buy equipment, you’re using it to acquire a tangible asset that can be used as collateral for the loan. In theory, this can reduce the lender’s risk and allow them to offer better terms and rates than they would without the collateral. This comes with some tradeoffs. Even when dealing with alternative lenders, the equipment financing process tends to be a bit more traditional. Lendio suggests a 650 minimum credit rating, 12 months in business, and $50,000 or more in annual revenue.

While many equipment loans traditionally require a down payment, Lendio’s funders do not.

Application Process

To get started with Lendio, create an account and fill out an application. The application requires basic information about yourself, your business, and your business finances. Lendio will perform a soft pull on your credit, which will not affect your score. Note that a hard credit inquiry may be required later in the process.

Lendio will shop your information around to get offers from the lenders that you may be eligible for. According to the customer service agreement, this step should take no longer than 72 hours.

A Lendio representative will get back to you with any offers received on your behalf. You can compare offers and choose the one best suited for your business and situation. When you’ve made your decision, you will be able to continue the funding process with your chosen lender.

The overall application process is extremely easy, although processing can take several days. Because other marketplaces can provide faster results, this did have a slight negative impact on our rating for Lendio. For its application process, we gave Lendio a 4.5/5.

Sales & Advertising Transparency

Lendio’s website provides all the information you need about the service, and the salespeople are similarly transparent. Customer reviews do not report incidents in which they were surprised by fees or other unexpected policies.

The only caveat is that you won’t know your loan’s exact terms until you are paired with a lender. Considering Lendio itself doesn’t have that information, it does an admirable job of preparing prospective borrowers for what they might expect.

There are some subtle differences between the types of loan products, so you may need to click through some links to find all the information available. Be sure to use the loan calculators to get a handle on what to expect.

Lendio’s usually excellent rating for sales and advertising transparency does have a recent gray mark. The Federal Trade Commission and SBA warned the company about potentially misleading coronavirus relief marketing. This did negatively affect our rating for sales and advertising transparency, which still sits at a respectable 4.4/5.

Customer Service & Technical Support

Customer support is available by phone or email. You can also interact with the company on Facebook, Twitter, Instagram, and LinkedIn.

When you apply for the service, you are assigned a funding manager who is your single point of contact. Your funding manager will bring you offers, help decide which options are best for your business, educate you on the loan products, and is available if you have any questions.

Lendio has a public customer service agreement on its website, which promises customer service standards, such as treating the customer with “transparency and respect” and answering questions “in a timely manner.” Although these are not particularly groundbreaking standards, the fact that Lendio publicly posts its agreement means the company at least understands how important these issues are to creating a positive experience for borrowers.

Customers report that the service is proactive, helpful, and transparent, and many like being assigned to a single funding manager who is familiar with their business and situation. However, a few customers say that the service is too heavy-handed with the sales pressure when it comes to phone conversations. Some have also complained about receiving a lot of calls from funding managers. Still, the quality of Lendio’s customer service led to our rating of a near-perfect 4.9/5.

User Reviews

Lendio is accredited by the Better Business Bureau, where it holds an A+ rating. Lendio has racked 18 complaints in the past three years, with nine complaints closed in the last 12 months.

Despite these complaints, Lendio has a mostly positive reputation among its users. On Trustpilot, Lendio has over 21,000 reviews, with an aggregate rating of 4.7 out of 5. Additionally, the company has some longer testimonials on its YouTube page.

Negative Reviews & Complaints

• Delays: While still fast compared to traditional lending, Lendio is a bit slower than many of the individual companies it partners with. Some customers also complained about falling through the cracks.
• Drawn Out Process: Related to the delays, one prominent complaint spoke of receiving regular new offers from Lendio that were then never followed through.
• Hard Credit Inquiries: Some customers complained about receiving hard inquiries on their credit when they were told there would only be soft ones.
• Lots Of Documentation Needed: Some customers had to provide a lot more documentation than they were prepared for.
• Mismatches: Some customers complained about being paired with lenders that were a poor match for their business and industry type.

Positive Reviews & Testimonials

• Customer Service: Users found Lendio’s customer service helpful and responsive in most cases. The dedicated case managers were generally well-received by customers.
• Easy To Use: Many customers found the centralized platform and its interface easy and intuitive to work with.
• Fast: While a little slower than some other alternative options, the process is still pretty quick, especially compared to traditional sources.
• Easy To Compare Offers: Lendio removes a lot of the legwork borrowers would otherwise have to do with each lender.
• Easy To Qualify: Customers who had trouble qualifying for loans through traditional sources appreciated that Lendio was able to find them funding at relatively reasonable terms.

Final Verdict: Is Lendio Worth It?

Over the last decade, many online lenders have cropped up, and many of these lenders have innovated funding in ways that are beneficial to merchants. However, the sheer number of options available means it’s difficult, not to mention time-consuming, for merchants to find a product suited for their business.

If it’s your first time looking for alternative funding and you’re confused about where to start your search or don’t have the time to fill out multiple applications, Lendio may be an excellent resource for your business.

There’s no fee for using the service, which puts Lendio ahead of some of its competition. It also connects borrowers with multiple funding options and is transparent about its rates, fees, and terms. As far as lending marketplaces go, Lendio is one of the top options, earning it an overall rating of 4.8/5 during our review.

However, if you already have a good working relationship with a lender, you can probably expedite the process by directly working with that lender.

Looking for even more funding options? If you’d prefer to apply to a lender directly, start your search with our picks for the best small business loans.

Business Loan & Funding Products Review Methodology

We spend hours researching and evaluating each business loan and funding product that we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.

When rating lenders and funding providers, we use a 31-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating. This rubric is applied to traditional term loans, as well as short-term loans, start-up loans, lines of credit, online lending products, merchant cash advances, and equipment financing products.

• Rates & Fees: 20% of the total star rating
• Services: 20% of the total star rating
• Eligibility Requirements: 20% of the total star rating
• Application: 15% of the total star rating
• Sales & Advertising Transparency: 10% of the total star rating
• Customer Support: 5% of the total star rating
• User Reviews: 5% of the total star rating

Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the lending product, customer support, and the overall reputation of the lender or funding provider.

Read more about how we rate small business lenders.

The Merchant Maverick Seal of Approval 🏆

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After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Lendio for yourself.

The Merchant Maverick Seal of Approval 🏆

Lendio	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Lendio for yourself.