Unlike peer-to-peer lenders, which fund loans via individual investors, direct lenders are funding your loan with their own capital, like a traditional bank. That means you may be able to get funds more quickly. The lenders profiled below also work with a wider range of businesses, including very new ones, but APRs can be higher.
Fundation
Fundation offers up to $150,000 for working capital loans and $500,000 for business expansion loans. Interest rates range from 7.99% to 25%; terms are one to two years for working capital loans and two to four years for business expansion loans.
You can have your funding as soon as three days after applying — a perk of going through a direct lender like Fundation instead of a peer-to-peer lender like Lending Club or Funding Circle. There is an origination fee of up to 3% of your loan.
The application is a bit more complex than comparable lenders, and you’ll need an established business to qualify: Your business must be at least two years old, and you need to have at least two full-time employees, excluding yourself.
Who it’s good for: Any established business that needs a relatively large amount fast will want to check out Fundation. Loans are available in all 50 states, and there are no additional costs except for the origination fee.
Who should pass: Fundation won’t be an option for any new business or sole proprietor. The application is also relatively time-intensive, and potential borrowers should be aware that this is a relatively new company with little in the way of online reviews.
OnDeck
OnDeck can lend up to $250,000 in as little as a day with minimal paperwork. However, you’ll need to be willing to accept a higher interest rate and shorter term (up to two years) in exchange for convenience and speed. You must have been in business for at least a year with at least $100,000 in annual revenue.
OnDeck offers two loans: Term and Term24. The former loan is for smaller amounts, aimed at less established businesses. OnDeck does not list an interest rate for Term loans, instead expressing payment as a fixed amount on every dollar borrowed. This can translate into a very high APR, as you’ll see in this example. Term24 loans are for more established businesses and have APRs from 19.99% to 39.99%.
Who it’s good for: Businesses that need funds quickly (and can pay it back quickly) are the best fit for OnDeck. Less-established businesses will want to take a look, but they should keep in mind that the APR might be fairly hefty.
Who should pass: Businesses with a proven track record that have less costly options should probably skip OnDeck unless lending speed is their biggest priority.
Kabbage
If your business is truly in a jam, Kabbage can provide up to $100,000 almost immediately after filling out a simple application. You are required only to have a business checking account or PayPal account to apply, but Kabbage can also examine data from other channels your business may use, including Amazon, eBay, Yahoo, and QuickBooks.
However, your repayment term will be a short six months, and the cost of convenience is high: 1% to 13.5% of the loan for two months, then 1% for the next four months. That could mean an APR as high as 90%.
Who it’s good for: Kabbage is a compelling option for small online businesses that don’t meet stricter requirements of other lenders. It’s also a contender for business that need money with as little lag time as possible.
Who should pass: Any larger business (or even a smaller business that has the luxury of time) should look elsewhere first because of high APRs.
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