Bond Street is a newer lender breaking into the small business lending industry. It’s only two years old, and has been making news headlines with its recent round of funding. Banks are simply taking too long to provide loans to small businesses, and owners are seeking alternatives like Bond Street.
Competitive terms and rates are available on its loans, and according to an article on Forbes, it has plans to expand its product offering to further help the small businesses it lends to. One feature the company wants to implement is a tool that will compare your business against similar businesses across the country. Bond Street is more than just a lender – it wants to be an advocate for its borrowers.
We also love the tagline: “Simple, transparent, fair financing for small businesses.” Let’s see if it lives up to that promise.
Bond Street Small Business Loan Details
With a small business loan from Bond Street, you can borrow $50,000 to $1000,000 on 1, 2, or 3 year terms. APRs range from 8% – 25%.
Payments are made on a semi-monthly basis on the 1st and 16th of every month.
An example payment would look like this: if you borrow $100,000 on a 3 year term with 13% APR, your monthly payment will be $3,378.53. Paying twice a month would result in two payments of $1,689.27.
The Pros and Cons of a Bond Street Small Business Loan
Pro: The twice a month payments are a good solution if you don’t think your business can handle one large payment per month, or daily debits. This may make your cash flow a bit easier to manage.
Con: Bond Street offers 1-3 year terms. While this is certainly better than lenders who offer terms of less than a year, there are a few lenders that can offer up to 5 year terms. Extending the term may make payments more manageable for you.
Pro: Bond Street has competitive rates. 8% – 25% are on par with what other lenders are offering, plus, the 3% origination fee that it charges is right in the middle of the 1% – 5% range that others charge.
Con: Unfortunately, your business has to be somewhat established to meet the minimum requirements of 2 years in business and over $200,000 in annual revenue. There are other lenders out there who only require 1 year in business, or $100,000 in annual revenue.
Pro: You can get funded in as quickly as 7 days. Because of its focus on technology, Bond Street is able to fund small businesses much more quickly than banks.
What Businesses Are Eligible For a Loan With Bond Street?
Your business needs to have more than 2 years of operating history, and it needs to be generating over $200,000 in annual revenue.
Businesses located in North Dakota, Nevada, South Dakota, or Vermont aren’t eligible for a loan.
Bond Street recommends having a personal credit score of 640 or above to qualify, but notes that other factors are taken into consideration.
As the business owner, you must be willing to guarantee the loan.
Application Process and Documents Needed
Applying for a small business loan with Bond Street is simple and fast. You create an account, link your financial accounts to import your data, and answer general questions about your business. You’ll have a decision in about 48 hours after submitting your application.
Wondering about the personal guarantee? If you don’t own your business 100%, Bond Street says, “In many cases, we are able to accommodate personal guarantees from less than 100% of the ownership.”
If an owner with less percentage of ownership has significantly better credit, it may be worth applying with him or her as the guarantor. Otherwise, go with the owner who has the greatest percentage of ownership.
Bond Street doesn’t spell out what documents you need during the application process, but many lenders want to see and know the following:
- Previous 3 months of bank statements (include all bank accounts you use regularly, not just your main account)
- Most recent business tax returns (the page showing your profit and loss is generally fine)
- Driver’s license/Photo ID of the owner applying
- Business tax ID
If your business uses Quickbooks Online, you’re in luck. You can link your account during the application process so you can share your financial statements easily. Bond Street also offers similar functionality for any IRS documents needed.
Overall, Bond Street aims to have loans funded within 7 days. It’s worth preparing ahead of time to make sure you have all the documents necessary to receive funding.
It’s also worth noting that Bond Street uses a soft credit pull when you initially apply. Your credit score won’t be affected by this. If you’d like to accept the loan terms you’re given, then a hard credit pull will be used.
The Fine Print
There are no prepayment penalties or hidden fees with a small business loan from Bond Street.
It charges a flat 3% origination fee for all of its loans, which is reasonable when compared with other lenders out there.
A UCC lien against business assets is also required.
Which Businesses Benefit the Most from a Loan With Lending Club?
Businesses that meet the requirements of 2 years in operating history and $200,000 annual revenue will benefit the most. Your business should also be able to handle twice a month payments to pay back the loan on time.
According to Bond Street’s website, the top reasons business owners choose to apply for a loan are to improve workspace or expand, refinance debt, purchase inventory or equipment, or to hire more employees.
Each of these has the potential to give you a good return. The loan you choose to accept should make financial sense for your business. If need be, include your accountant in the decision-making process.
Other Alternative Small Business Lenders
While Bond Street has good rates and terms when compared with other lenders, perhaps you don’t think you’ll meet the minimum requirements, or want a monthly or daily payment. Here are some alternative lenders to consider.
Swift allows businesses to borrow $5,000 to $200,000 on 3 to 12 month terms. Its origination fee is only 2.5%, and its APR is as low as 9.99%. No personal guarantee is required, and the minimum credit score needed to apply is 550. You only need one year in business and $5,000 in monthly revenue to be eligible. Swift offers daily payments.
CAN Capital offers business loans of $2,500 to $150,000 on terms of 4 to 24 months. Its origination fee can typically be waived, and if you pay your loan off early, you’ll actually receive a 6% discount. A minimum of $4,500 monthly revenue is required, and your business needs at least 4 months of operating history to qualify. The minimum credit score needed is also 550, and CAN offers daily payments. A personal guarantee is required.
Lastly, you can borrow $5,000 to $250,000 on a 3 to 24 month term with OnDeck. Its origination fee is 2.5%, and you only need one year of operating history and $100,000 in annual revenue to be eligible. Your credit just needs to be over 500. OnDeck has daily payments and a personal guarantee is required.
Shopping Around Is a Must
The worst part about small business loans is the time factor. While time is money when you have your business to worry about, you should also be thinking of how much this loan will cost you. If you can get better rates and terms, then the loan won’t cost your business as much. It’s worth taking just a few days to research your options and shop around. Doing so within a 30 day period won’t have a huge impact on your credit, either. Plus, lenders like Bond Street and Lending Club use soft credit pulls initially, so your credit won’t be harmed anyway.