- Borrow up to $250,000
- Apply in 5 minutes
- Funding by next business day
- Required time in business: 6+ months
- Required monthly revenue: $10k+
- Min credit score: No credit needed
- Large network of 75+ lenders
- Quick online application
- Funding as quick as 24 hours
- Required time in business: 6+ months
- Required monthly revenue: $8k+
- Min credit score: 520+
- No hard credit check to use
- Funding Advisor provides products tailored to your business
- Funding as fast as 1 business day
- Required time in business: 6+ months
- Required annual revenue: $60,000+
- Min credit score: 550+
Running a business is more than a full-time job. When you’re just starting out or short on resources, chances are you simply don’t have the time to find financing on your own, even when you need it.
This is where business loan marketplaces can help. It cuts down on the time it takes to find a lender that meets your needs while providing resources to help you along the way. Read more to learn if business loan marketplaces can help your search for business loans.
What is a business loan marketplace?
A business loan marketplace is a service that connects you with multiple lenders after filling out a basic application, usually online. The main function of a business loan marketplace is to reduce the amount of time it takes to find a lender that meets your business’s needs and that you qualify for. It offers a huge perk in that its a way to basically pre-qualify with multiple lenders without affecting your credit score. On top of that, many offer resources to help first-time business loan borrowers navigate the process.
Using a marketplace to find a lender is usually free for borrowers, though some charge a service fee.
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How do business loan marketplaces work?
Business loan marketplaces work a lot like online direct lenders at first glance. You typically have to fill out a brief application with basic information about your personal and business finances. But instead of getting one offer that you might qualify for, you’ll receive several from multiple lenders. Some marketplaces show all your options at once. Some give your contact information to its partners, that in turn reach out to you. Others do a combination of the two.
Some business loan marketplaces are more involved than others. While many free services stop after you choose a lender, some paid services like BoeFly continue to help you with your application and even pull strings with their partner lenders to make your application go through as quickly and smoothly as possible.
Business loan marketplaces are great for speeding up the amount of time it takes to find a lender or get assistance. However, you’ll always be limited to its network of partners.
Should I consider applying through a marketplace for my business loan?
When marketplaces can be great…
- You’re short on time. Marketplaces can cut down on the time it takes to find a lender that’s right for you without having to settle on the first one you find.
- You’re not sure where to start. Many marketplaces offer resources and guidance for customers who haven’t taken out a business loan before.
- You’ve been rejected before. If you’ve been rejected after applying for a loan more than once, you might have better luck if your selection is filtered to lenders with eligibility requirements you can meet.
- You want to explore unfamiliar options. Most offer a wide range of loans and can connect you with financing you didn’t know your business could qualify for.
Where they fall short…
- Don’t give you every option. True, some marketplaces have wide networks, but you won’t be able to compare absolutely every financing option out there.
- Prioritizing your needs. The pay-per-lead model many marketplaces use means it’s in its financial interest to keep lenders satisfied, not you.
- Protecting your contact information. While using a marketplace doesn’t necessarily increase your risk of identity theft, you might end up fielding calls and emails from multiple lenders, even after you take out a loan.
Business loan marketplace vs. direct lender
Business loan marketplace | Direct lender | |
---|---|---|
Application process | Fill out an application, get offers from several lenders and then continue with application through direct lender. | Fill out application to prequalify if available, review offer, submit documents and additional information and then sign loan documents if approved. |
Fees | Some are free, while others charge a membership fee, flat-rate per loan or both. The direct lender charges interest and fees according to your loan term. | Usually no application fee. The cost of business loans might include origination fees, SBA guarantee fees, prepayment fees, late payment fees and more. |
Sharing of information | Shares your personal information with vetted lenders who can use it for marketing purposes, with an option to opt out. | Generally doesn’t share your information with third-parties for marketing purposes. |
Is a marketplace the same as a peer-to-peer lender?
No. Peer-to-peer business lenders connect borrowers with funds from investors who finance your loan. They often offer a couple of loan products that come with interest rates, fees and terms that the peer-to-peer lender sets.
Marketplaces are connection services that tend to have many more loan options and don’t set the rates, fees or terms of loans. They’re a stepping stone to direct lenders, while peer-to-peer lenders are one-stop shops.
Despite these differences, it’s not uncommon to hear the terms peer-to-peer and marketplace lending used interchangeably. Some peer-to-peer lenders even refer to themselves as “peer-to-peer marketplaces.”
If you’re not sure which one you’re dealing with, you can usually get a clue from the way it works. If it mentions connecting you with investors, you’re probably looking at a peer-to-peer lender. If it mentions connecting with lenders, it’s likely you’re looking at a business loan marketplace.
Bottom line
Business loan marketplaces could be a great resource if you don’t have the time to compare lenders on your own or need help with the application process. But be aware that you’re restricted to its network of lenders and it might not always have your best interest in mind when it comes to the bottom line. You also might have to field calls from lenders even after you’ve signed off on a loan.
Not sure if a marketplace is right for you? Check out our guide to business loans to learn about your other options.
Frequently asked questions
How do I repay a loan I got through a business loan marketplace?
You repay your loan directly through your lender. Typically, your relationship with a business loan marketplace ends either after you’ve found a lender or after your funds are disbursed.
Are business loan marketplaces startup friendly?
Some are. Look for a marketplace with a startup program or one that mentions funding new businesses.
Can I use a business loan marketplace if I have bad credit?
You can, though you might have difficulty being matched with a lender or you may only get accepted with high interest rates. If you’re having trouble qualifying for a loan, take some time to focus on growing your business and improving your personal credit score before applying again.
Is a business loan marketplace the same as a broker?
No. Business loan brokers are professionals hired to present your application to lenders and find you financing. You typically have to pay a business loan broker a percentage of the financing you receive.
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