Author Topic: LC Business Loans  (Read 7224 times)

avid investor

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LC Business Loans
« on: February 11, 2015, 09:08:17 AM »
Are LC's business loans (up to $300k) also unsecured loans?

Kombinator

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Re: LC Business Loans
« Reply #1 on: February 11, 2015, 09:35:27 AM »
Yes, I think there you look at the business details and also the main borrowers FICO scores as a reference point, also if they have any guarantors.  Curious when these will become available on a platform, they have been beta testing them for about a year now.

avid investor

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Re: LC Business Loans
« Reply #2 on: February 11, 2015, 09:37:55 AM »
Interesting that they would loan $300k on only the strength of the borrower's credit score.  Aside from obvious fraud, I would suspect that it would fund a lot of ventures that no bank would ever touch due to risk and legality.

Kombinator

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Re: LC Business Loans
« Reply #3 on: February 11, 2015, 02:55:01 PM »
They lend on the strength of the underlying business cash flows, ebitda, debt load and coverage etc, the borrowe is a secondary metric.

RazzleDazzle

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Re: LC Business Loans
« Reply #4 on: February 11, 2015, 04:01:32 PM »
Business loans are more difficult to underwrite and involve underwriting both the borrower and the business. Even more complicated if real estate involved, in which case its the borrower, the business and the real estate (collateral).

rawraw

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Re: LC Business Loans
« Reply #5 on: February 11, 2015, 04:08:11 PM »
Business loans are more difficult to underwrite and involve underwriting both the borrower and the business. Even more complicated if real estate involved, in which case its the borrower, the business and the real estate (collateral).
Why do you view real estate as complicated? To me other types of collateral are more complicated. But the existence of collateral in general adds complexity, which is what I think you meant. Especially collateral that can move or that you can't perfect liens on.  Examples of this is marine vessels used in private enterprise or some forms  tax credits. 

RazzleDazzle

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Re: LC Business Loans
« Reply #6 on: February 11, 2015, 04:27:24 PM »
Thats what I meant rawraw - adds complexity. Real estate or inventory sometimes (depends) are "easier" to write to than what you mentioned.


AnilG

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Re: LC Business Loans
« Reply #7 on: February 11, 2015, 09:01:58 PM »
Any loan secured by real estate or inventory or any other asset is not an 'unsecured' loan. It is a secured asset-backed loan, totally different animal from the unsecured loans.
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avid investor

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Re: LC Business Loans
« Reply #8 on: February 12, 2015, 07:50:23 AM »
So, all of this discussion brings me back to the original question.  Does anyone know what LC's process is for these business loans, and if they are secured or unsecured?  It sounds like everyone here is only speaking from conjecture, and doesn't know LC's underwriting process for business loans.

Kombinator

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Re: LC Business Loans
« Reply #9 on: February 12, 2015, 09:41:14 AM »
Process is similar to Funding Circle, Kabbage or any other platform that does unsecured small business loans

Half Right

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Re: LC Business Loans
« Reply #10 on: February 12, 2015, 03:11:38 PM »
Funding Circle takes personal guarantees

SeanMCA

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Re: LC Business Loans
« Reply #11 on: February 13, 2015, 12:33:07 AM »
I wouldn't touch Lending Club's business loans with a 10 foot pole. These are stated income loans where little to no underwriting is done nor are there any checks to verify revenues and bank statement legitimacy. Every other business lender out there has been crushed by the sheer volume of doctored statements. It's an epidemic. Because of that it's become a standard to use yodlee, decision logic, and other types of bank access mechanisms to verify the accuracy of information supplied by the merchant.

Not LC though. Their business loan program takes the numbers at face value and offers longer term loans and cheaper rates than what much tougher alternative business lenders are doing.

I learned about their face vaue acceptance of business revenues and legitimacy by asking a high level Lending Club employee about 6 months ago.

I love their consumer notes so far. Have a decent amount of money in but am very bearish on their business loan concept. They have a huge learning curve ahead of them.
« Last Edit: February 13, 2015, 12:35:20 AM by SeanMCA »
I'm a merchant cash advance veteran exploring the p2p lending waters.

SeanMCA

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Re: LC Business Loans
« Reply #12 on: February 13, 2015, 12:43:59 AM »
Process is similar to Funding Circle, Kabbage or any other platform that does unsecured small business loans

Except Kabbage captures the merchant's bank data via yodlee, not paper statements like it's 1992. Funding Circle does a full manual human underwrite just like a bank would. LC's business loan underwriting is worse than both by a longshot.
I'm a merchant cash advance veteran exploring the p2p lending waters.

rawraw

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Re: LC Business Loans
« Reply #13 on: February 13, 2015, 10:37:12 AM »
So, all of this discussion brings me back to the original question.  Does anyone know what LC's process is for these business loans, and if they are secured or unsecured?  It sounds like everyone here is only speaking from conjecture, and doesn't know LC's underwriting process for business loans.
You are asking questions about the contents of a black box.

Kombinator

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Re: LC Business Loans
« Reply #14 on: February 17, 2015, 09:40:55 AM »
Process is similar to Funding Circle, Kabbage or any other platform that does unsecured small business loans

Except Kabbage captures the merchant's bank data via yodlee, not paper statements like it's 1992. Funding Circle does a full manual human underwrite just like a bank would. LC's business loan underwriting is worse than both by a longshot.

Good to know, I will give them a call once they do make the business loans available, but for now will definitely keep allocating to Funding Circle, they have a great team and solid framework (although they are only slowly and painfully getting up the learning curve on the technology side).