Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.
Small businesses are fragile; a simple funding gap or lack of seed money can mean the difference between a Fortune 500 company or another failed startup.
And unfortunately, big banks can be pretty conservative when it comes to doling out loans to fledgling businesses. However, a new option has emerged in recent years to help small businesses to get the funding they need: peer-to-peer business lending.
This LendingClub vs. Funding Circle comparison will look at two leaders in the space to help you get the funding you need.
In this comparison:
- LendingClub vs. Funding Circle: Business loans at a glance
- Funding Circle vs. LendingClub: Which small business loan is best for you?
LendingClub vs. Funding Circle: At a glance
|Rates (APR)||9.77% – 35.98%||11.67% – 36%|
|Loan Amounts||$5,000 – $500,000||$25,000 – $500,000|
|Time to Funding After Approval||2 – 14 days||2 – 14 days|
|Origination Fees||3.49% – 7.99%||3.49% – 6.99%|
Founded in 2007, LendingClub is just two years older than Funding Circle, but it dwarfs its younger rival in loan originations $28 billion to $10.9 billion.
This is likely due to the fact that Funding Circle focuses solely on small business loans, while LendingClub supports a wide range of loans, including personal loans, auto loan refinancing, and medical procedure financing.
Both are peer-to-peer (P2P) lenders based in San Francisco, and both offer high loan amounts with competitive loan rates and terms. Both lenders use proprietary algorithms to crunch through mountains of data in determining whether you have the ability to repay the loan.
You can learn more about each lender in our full LendingClub business loans review and our full Funding Circle small business loans review. In the next section, we’ll break down a few scenarios to help you determine which lender is best for you.
Funding Circle vs. LendingClub: Which small business loan is best for you?
When comparing lenders, it can sometimes be difficult to determine which is right for you. So, here are a few common scenarios where one lender may make more sense than the other:
- If you only need a small amount of cash
- If you’re only in your second year of business
- If you want to take out other types of loans in the future
- If you own less than 20% of the business
If you only need a small amount of cash: LendingClub
If you only need a small loan to solve an urgent issue, LendingClub is the better choice. With LendingClub, you can borrow as little as $5,000, whereas with Funding Circle, the smallest amount you can borrow is $25,000.
You don’t want to borrow thousands more than you need or you’ll end up paying higher origination fees and more in interest.
If you’re only in your second year of business: LendingClub
Most small business lenders require you to have been in business for a minimum amount of time before they’ll issue you a loan. For LendingClub, this minimum is 12 months, but for Funding Circle, it’s 2 years.
If you want to take out other types of loans in the future: LendingClub
As we mentioned above, LendingClub also offers personal loans, auto loan refinancing, and medical procedure financing. If you think you’ll need to take out any of these types of loans in the future, you may want to go with LendingClub for your small business loan.
Having a track record of responsible borrowing with the platform may help you secure better rates on future loans, and if nothing else, you’ll be familiar with the platform.
If you own less than 20% of the business: Funding Circle
LendingClub requires its small business loan applicants to own at least 20% of the equity in their business. Funding Circle doesn’t disclose an equity requirement, so if you own less than 20%, you can try applying with them.
LendingClub vs. Funding Circle: Final thoughts
As you can see, the two lenders are very similar, and you really can’t go wrong with either. Both are strong options, and it may be worth getting a rate quote from both at the same time to see which offers you the better APR.
We also recommend you get quotes from a one or two of these other business term loans for comparison, and if you’re not sure what type of loan your business needs, check out our directory of small business loans to learn about your options.
Author: Daniel Caughill