StreetShares Review: Rates, Terms, and More
Military veterans make great sacrifices for their country, so the founders of StreetShares wanted to reward them for their efforts with business loans and financing. Let’s take a look at what StreetShares offers borrowers and investors.
What we like:
Helpful online chat service
|Estimated APR||9.00% – 40.00%|
|Loan Amounts||$5,000 – $250,000|
|Term Lengths||3 – 36 months|
The box above covers StreetShare’s term loan.
If you’re a veteran whose biggest battle lately is getting funding to keep your small business going, there’s a new option you might want to consider. StreetShares may not have as much experience in the lending game as some other more established companies, but its founders have personal experience being a veteran trying to fund a new business.
StreetShares offers fast small business loans and other financial solutions with different terms, as well as veteran business bonds.
In this review:
- About StreetShares
- Applying for a StreetShares Loan
- StreetShares Loan Rates, Terms, Fees & Limits
- Benefits of a StreetShares Loan
- Downsides of a StreetShares Loan
StreetShares co-founder Mark L. Rockefeller served in the U.S. Air Force for nine years. He saw that banks weren’t addressing a specific need for lending money to veterans who wanted to start their own businesses. So in 2013, he teamed up with Mickey Konson, who has a strong financial background, to launch StreetShares.
Located in the Washington, D.C., metropolitan area, StreetShares says it focuses on several key business values: integrity, member service, excellence, and innovation. The company addresses the needs of veteran business borrowers by offering financing options such as loans, lines of credit, and account receivables financing. To date, the company has more than 65,000 members.
Applying for a StreetShares Loan
Anyone can join StreetShares. You don’t have to be a member of the military to become an investor and benefit from lending money to service members. Most of StreetShares’ members are linked to the military, but that isn’t a requirement.
To get a loan with StreetShares, you must be a citizen of the U.S. and have been a business owner for at least six months, although one year is preferred. Borrowers must also have a business guarantor with decent credit.
When it comes to repayment, StreetShares sets up a fixed weekly payment in which it deducts money directly from your account.
StreetShares Loan Rates, Terms, Fees, and Limits
The company offers various funding options for small businesses. Let’s take a look at each one.
Term loans are available in varying amounts, from $2,000 to $250,000, and you can get your money quickly in one installment. For the repayment, business owners can opt for terms of anywhere from three months to 36 months. And if you want to pay off the loan faster, you can do so with no prepayment penalties.
With a term loan, you can get pre-approved within a few minutes and the inquiry won’t hurt your credit score. If you’re in a time-sensitive pinch with your finances, you may be relieved to learn whether you’re approved and to get your loan money in days instead of the weeks it would take with a traditional bank.
Patriot Express Line of Credit
A business line of credit is different than a loan in that you only take out the money when you need it. Lines of credit are kind of like having a back-up plan in place, just in case you need some assistance. You’ll only be charged interest on the money you use, not on the whole amount available to you.
With this option through StreetShares, you can get from $5,000 to $250,000. The term can range from three months to 36 months. As with the term loans, there is no prepayment penalty.
If you need enough working capital to fulfill a big upcoming order or contract, you might want to look into contract financing. There aren’t any hidden fees with contracting financing from StreetShares. And there isn’t a limit on the contract amount – it’s based on your future earnings.
Veteran Business Bonds
Through Veteran Business Bonds, you’ll invest money into a pool of capital. That capital is then lent out to military veterans and other business owners. For investing, you get a 5% return through a fixed interest rate. That rate is generally higher than you’d get with a long-term CD right now.
Even better, the money isn’t tied up long-term as it’s a liquid investment. Every year on the anniversary of your investment, however, you are given a two-week timeframe where you can withdraw your money without incurring a penalty.
Although this money isn’t FDIC insured and there is some risk involved, the rate of return has remained competitive even as CD rates have been climbing.
Unlike some investing platforms, you can begin investing with a small amount of money with StreetShares. You only need to add in $25. After that initial investment, you can add funds as frequently as you want.
If you like to check your account frequently, you can log in at any time. And you might like the fact that your money isn’t tied to one business with Veteran Business Bonds, so you won’t have a lot riding on one person’s success.
StreetShares Pro Investing
While anyone can invest in the Veteran Business Bonds, with StreetShares Pro, only accredited and institutional investors can contribute.
Benefits of a StreetShares Loan
If you love the idea of supporting a business that provides loans for military veterans, you should consider the several upsides of StreetShares. As far as investing, the biggest benefit is the low-risk 5% rate of return and the fact you can invest with a small amount of money. That opens up the opportunity to anyone who might like a decent rate of return.
Compared to some other small business loan lenders, there are advantages to using StreetShares for small-business financing. Kabbage, another small-business lender, also offers business loans up to $250,000. But unlike StreetShares, they don’t offer as long of a repayment term, with borrowers limited to a six- to 12-month term. That may not be enough time for a small business to get onto solid financial ground.
Another lender, LendingClub, requires business owners to have $50,000 in annual sales to qualify for a loan. That can be difficult for smaller businesses. StreetShares will vet a business plan to ensure it is sound before lending, but it is generally flexible with lending to smaller businesses earning smaller amounts.
In other advantages, the APRs you can get with StreetShares are generally lower than many short-term small-business loans, which can have APRs of more than 100%. They are competitive with other online lenders, with an assortment of lending options that can have APRs from as low as 7% to as high as 39.99%. And if you need cash fast, StreetShares can often provide your money in two to five days.
Finally, to help educate business owners and to give them some tips, StreetShares publishes a blog that is regularly updated with articles to educate entrepreneurs.
Downsides of a StreetShares Loan
For borrowers, StreetShares’ APRs, which are generally low compared to many short-term loans, are still higher than you’d get with a bank. Anyone who needs a small-business loan should first apply at a traditional bank to see if they can get the money at a lower APR than StreetShares offers. If that’s not possible, or if you need money faster than a traditional bank can provide, StreetShares might be a good back-up option.
Keep in mind that StreetShares is still a fairly new business. Although that shouldn’t stop you from doing business with this company, if you’re looking at investing in the Veteran Business Bonds, you may not want to invest a significant amount of your portfolio. Because there is some risk involved, you have to realize this money is not FDIC-guaranteed as a savings account.
A unique concept, StreetShares is an online lending service that offers a solution for a segment of the population that can sometimes have a difficult time landing a traditional loan and launching their businesses. Here is what the company does well:
- Offers an impress rate of return for investors
- Makes the loan application process easy and quick
- Provides a variety of business funding strategies
If you’re a small-business owner, StreetShares is worth considering when looking for a small business loan for veterans. Similarly, if you’re an investor who is looking for a reliable return, these financing methods provide a fairly low-risk option.4.36 Street Shares Small Business Financing