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Alternative lending experience

The last post in this topic was posted 1233 days ago. 

 

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Has anyone applied for a loan/LOC from alternative lenders such as On Deck, Funding Circle, Fundera, etc...? What did you need to submit? Was it easier than going to a bank/SBA lender?

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If you have very good personal credit and don't need a lot of money your best bet is always a actual bank or Credit Union.

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I did one through platinumcapital for 10K. I did know what I was getting into before I did it. I needed the money fast to grab another contract, and knew I could pay it back right away. The daily re-payment really scared me.

 

Since I don't take credit cards, I had to send last 6 months of bank statements.

 

Then you have to give them access to your bank account online, user name, password and all challange questions - they will then verify your account with your bank statements.

 

They will then call your landlord and ask if you have ever been late on your rent, and if you are a good person, how long if left on your lease.

 

Then you sign 15 pages of contracts, including a page giving them daily access to your bank account online to verify daily transactions, and notices of default.

 

Then the underwriter will call you and ask you a bunch of questions, and then will tell you the fees for the loan, the payback amount and how much will come out of your account on a daily basis.

 

Then they wire transfer the money to your account, and then next day, they start taking out the daily payments. You can pay off the loan early, but you still pay the same amount, there is no discount.

 

If you really have to do it, and know you can re-pay it, then as long as you read all the fine print, you should be ok. But if you are not going to have the money at some point to re-pay, I have a feeling they will come to your office and take you away if you don't re-pay. They just seem like a goodfellows club from all the ones that I spoke with, and there are tons of them out there.

 

Fundera did call me after I got the first loan, and told me that they would be able to beat anyones rates and repayment terms, and that I should have gone with them in the 1st place, but who really knows. This is basically payday loans for business.

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Then you have to give them access to your bank account online, user name, password and all challange questions - they will then verify your account with your bank statements.

 

 

 

Damn that's crazy!

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Any time you need to give a lender access to your accounts to secure a loan you should be running not walking away from that company.

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We just got one from Ondeck for 10K. We do take credit cards but we probably do less than $500 a month in credit card sales (it also wasn't a requirement for OnDeck) we sent 3 months of bank statements, a color copy of the owners id, copy of our business lease with canceled rent check, and a utility bill. Sent all of that plus the app, 2 hours later got a call from the underwriter 2 days later had the money.

Oh... we also had to send a copy of a voided check for daily ACH withdrawls.

 

First time we've ever done something like this, but we needed it fast to cover payroll due to acquiring new clients and staff due to another company closing down.

 

What I don't like, is that if we decided to pay it off today we wouldn't be saving money in interest. Whether we take the entire term or pay it back in 1 week you still will pay the amount of the loan + interest

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Any time you need to give a lender access to your accounts to secure a loan you should be running not walking away from that company.

 

This.

We just got one from Ondeck for 10K. We do take credit cards but we probably do less than $500 a month in credit card sales (it also wasn't a requirement for OnDeck) we sent 3 months of bank statements, a color copy of the owners id, copy of our business lease with canceled rent check, and a utility bill. Sent all of that plus the app, 2 hours later got a call from the underwriter 2 days later had the money.

Oh... we also had to send a copy of a voided check for daily ACH withdrawls.

 

First time we've ever done something like this, but we needed it fast to cover payroll due to acquiring new clients and staff due to another company closing down.

 

What I don't like, is that if we decided to pay it off today we wouldn't be saving money in interest. Whether we take the entire term or pay it back in 1 week you still will pay the amount of the loan + interest

 

No you dont. If you pay it off today, You dont pay the interest out to the 6 month mark. I dont know where your seeing that.

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I used a company called Trident Leasing. www.tridentleasingcorp.com. It's a daily ACH but they take the average of your last 6 months bank statements and multiple it by 2 to 3 times and base the lending on that. Let me know if you want my contact person there.

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No you dont. If you pay it off today, You dont pay the interest out to the 6 month mark. I dont know where your seeing that.

Yes you do with On Deck.

 

I had a loan with them a couple years ago and they wrap everything into "fees" so it's not technically interest.

 

You have to pay the full amount regardless of when you pay it off.

 

It's highway robbery and I would never do it again unless my life depended on it.

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No you dont. If you pay it off today, You dont pay the interest out to the 6 month mark. I dont know where your seeing that.

Yes you do with On Deck.

 

I had a loan with them a couple years ago and they wrap everything into "fees" so it's not technically interest.

 

You have to pay the full amount regardless of when you pay it off.

 

It's highway robbery and I would never do it again unless my life depended on it.

I took a 1k loan just to get the line to report... let it sit for two weeks, paid it off. I paid 14 dollars in interest and no fees over the two weeks I kept it open. I did this 3 weeks ago...

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Paypal lending has been the fairest alternative lending source that I have seen. You need to run a decent amount of your sales though paypal or "paypal here" and establish a solid history with them, but once you do that, you should be able to get in with them. Based on our experience, they lend the equivalent of an average of 1 month of gross sales that are run though paypal. You pick the % of sales that you pay back. The smaller the %, the higher the upfront fee. As little as 10% of your daily sales and it comes out of your paypal account daily. If you don't do any sales on a given day, they don't take anything. If you do $1000 in sales, they take $100 the next day. They expect to be paid back in about 11 months, however depending on your sales, it could be sooner or later. They watch your sales history so if you have been averaging $10k a month in credit card sales and then all of a sudden you are doing $4,000 in monthly sales, you will have a problem. Borrowing costs are based on the % of sales you choose to pay back. If you choose 30% of sales, the fee will be substantially lower than the borrowing cost with a 10% of sales pay back as you will be paying back the loan much quicker.

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Then you have to give them access to your bank account online, user name, password and all challange questions - they will then verify your account with your bank statements.

 

 

 

Damn that's crazy!

 

Do they ask if you wear thongs or boxers?

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over the years my business partner and I spoke and dealt with multiple small lenders who claim they have awesome rates. All in the end offered bad rates for business equipment (for transportation). Recently, we were intrigued to find out that Americаn CаpitаI Grоup (based in Irvine, CA) was able to offer supposedly awesome lease rates to businesses. So my partner filled out their app (for a company that only he owns), but only after they promised that there won't be a hard inquiry, that they only do a soft inquiry. This allowed to temper scepticism, since essentially he had much less to lose - the application itself was short and easy, and there was no problem with credit score taking a dive from such a soft inquiry.

 

About the business used: established in 2009, in good standing all these years, conducted business worth hundreds of thousands. Personal score (they check Equifax only for personal) is excellent - depending on scoring model used ranges from mid to very high 700's. Business experience encompasses many years, references are available and very good. Business credit (they check DNB and Equifax) is good, but not that extensive for this company, since didn't need it much.

 

Anyhow, with such positive and good profile, they instantly approved for $100K that same day, and if I were to submit financials, could have approved up to $150K.

 

We only needed just over $71K. They came back with the following terms:

 

1) at the end of the lease, we would need to buy the equipment at 10% of its current value (~$7140).

2) terms could be any length we wanted. We asked for either 24 or 36 months to consider.

 

24 months is .05106 money (lease) factor - which is a whopping 122% interest rate. At the end of 2 years we would have paid $94,628.40 for this "lease".
36 months is .03607 money (lease) factor - which is equivalent to 86% interest rate. At the end of 3 years we would have paid $99,862.68 for this "lease". So they would have profited almost $30K (some 40% of the loan amount) over 3 years from us. Not bad, uh?
So while they promised no more than 6% interest rate to us on the phone, in reality they offered much, much higher rate - and of course claimed that since it's a lease, there are no interest rates, there are only lease factors/money factors, blah-blah, that it's not the same, etc. I guess they are able to fool some desperate people this way.
Needless to say, we turned down this "opportunity" (especially after we found horrible reviews of this company on one of the websites - all reviewers said the same things about them), and just financed the purchase with one of the large well-known companies that offered terms that made sense and that were fair.
My appeal to all business people: don't give business to such "finance" companies that charge you crazy rates. Either don't expand your business until you can get better rates (which will happen with time) or do a better job (try harder) now at getting better rates from your local banks and solid financial companies. All these OnDeck Capital's, Advance Business Capital's, etc., overcharge you, and it's not worth it.

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With equipment leasing you are going to pay more than on a conventional term loan or LOC, but there are benefits to some business to lease equipment rather than get a loan to purchase it outright. Also, with an operating lease agreement you can expense the whole rent payment rather than just expense the interest portion as in a regular loan, but it helps to find a reputable equipment lease company so you won't get screwed. I would recommend fundera.com or lendio.com they work with multiple leasing companies.

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You can expense it but with rates like that you should stay far away. I wouldn't look for ways to justify doing it and should only be done as a last resort. Interest paid to lenders is the last expense you want to be paying, tha is money out of your pocket.

 

I know some people say they have no choice which may be the case but this is also a prime reason businesses fail and owners get stuck with debt they can't pay off.

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Shifter: OnDeck has revised their policy as of Dec 2014. If you pay off early, there's a 20% pre-payment discount. There's so much competition in the realm that they had to given in. MCC has a better policy for pre-payment. If you're rate sensitve, try www.lendingclub.com or www.kabbage.com. Smaller approvals and lower rates.

Also, their rates are consistent with what the market with bear. These are cash-flow based loans and are un-collateralized. OnDeck has rates as low as 1.15 plus an O fee on a 6 month. Alternatively, New Logic Business Loans offers 1.2 over 12 months. That's pretty darn reasonable money.

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Guest KristofsMom

do any of these sources report on-time payments to D&B or other bureaus?

I have never used these companies. However, I know of a few who have. From their experience these companies do NOT report!

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A blanket lien gives the lender the right to collect any asset held by your company in order to satisfy the loan should the company default.

Wow.

 

I guess that's a good enough reason to always owe than be debt free or have a separate corp "lease" you your assets.

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