Dealstruck is a unique direct online small business lender in that it takes a balance sheet approach to funding its loans, which includes funding the loan upfront itself and then finding institutional investors after the fact. It’s a relatively new company as it has only been lending to small businesses since 2013, but it has grown rapidly along with the small business lending industry as a whole.
Its mission “is to provide small business owners with unique, appropriate, and affordable capital with honesty and transparency.” Dealstruck is looking to help small businesses that are already established and have a proven track record of profitability, but are being turned away from banks for traditional financing. If this sounds like your business, read on for the details of its loan.
Dealstruck Small Business Loan Details
Dealstruck offers a business term loan, a revenue secured term loan, and a line of credit. For this review, we’ll be focusing on the business term loan.
You can borrow from $50,000 to $350,000 on a term of up to 4 years. The APR range isn’t published on the site, but according to Candace Klein, Chief Strategy Officer of Dealstruck, “APRs range from 10% to the low 20%’s.” The APR you receive depends on the type of loan you apply for.
This loan usually requires you to make payments once per month. If you borrow $65,000 on a term of 3 years with a 15% interest rate, your monthly payment will be $2,253.25.
The Pros and Cons of a Dealstruck Small Business Loan
Pro: Dealstruck offers decent terms and rates for small businesses that have only been operating for a year or more.
Con: Dealstruck’s website is not very intuitive to use. While its mission is transparency, finding information about specific loans is a bit challenging. Its “Loan Products” page doesn’t display unless you click on the “Contact” page first, and you must be on the login page to view the FAQ section.
Pro:Since Dealstruck’s loans are crowdfunded by investors after the fact (as it remains a direct lender), it’s able to offer lower rates and better pricing. Its risk appetite is a bit higher than that of other lenders, and much higher than a bank’s.
Con: Dealstruck doesn’t offer many details on its website for the business term loan. If you want to fill out the preapproval form for a quote, it won’t impact your credit score, so there’s no harm in doing so if you’re curious about what terms you might be eligible for.
Pro: If daily payments are too much for your business to handle, once a month payments might be better for your cash flow.
Con: The 2.99% to 5.99% origination fee is on the higher end, though the lower APR might make up for the fee.
What Businesses Are Eligible For a Loan With Dealstruck?
Your business needs to have more than one year of operating history and annual sales of at least $250,000 to qualify.
Dealstruck is looking to loan to businesses with a solid record of cash flow and profitability, with strong asset bases for collateral, and a history of being able to manage debt responsibly. Having good credit (above 600) also helps.
Its main goal is to help small businesses that have been turned away by banks, and eventually graduate those businesses into being “bankable” after paying back their loan. It aims to serve the gap between expensive, short-term loans and bank financing.
It also looks to help fund “riskier” industries that banks shy away from, such as janitorial services, hospitality, retail, and salons.
Dealstruck currently lends in 43 states. North Dakota, South Dakota, Nebraska, Missouri, Tennessee, Hawaii and Vermont are excluded.
Application Process and Documents Needed
Dealstruck’s application process is simple. You fill out preliminary information about your business, and choose the loan option that will fit your needs the best. You’ll then be required to verify your business income with financial statements.
During the application process, you’ll be asked to provide certain information so Dealstruck can retrieve your tax returns for the last two years, your bank statements, and credit scores of the owners applying.
Note that you can choose to apply or get a preapproval. A preapproval won’t affect your credit score, though a hard pull will be used if you go through the entire application process.
Dealstruck requires a minimum of 3 months of your most recent business bank statements. You can log into your bank account via its portal, or manually upload them.
You’ll be able to get funded in as little as three days as long as you provide the necessary documentation.
The Fine Print
Dealstruck charges a 5.99% origination fee for its business term loan, though there’s no prepayment penalty.
A personal guarantee and UCC lien against business assets are required – this is standard for most small business loans.
Which Businesses Benefit the Most from a Loan With Dealstruck?
Dealstruck is mostly looking to lend to businesses that are already established and making a profit. Entrepreneurs and startups might not find the help they need here.
If your business has been gaining traction, and you need funding to expand and take your business to the next level, Dealstruck can help.
Popular reasons to apply for a business term loan include needing new inventory or new equipment, consolidating debt, business expansion, working capital, and hiring staff.
Other Alternative Small Business Lenders
Perhaps your credit isn’t good enough to qualify, or you’re in a state where Dealstruck doesn’t currently lend. There are a few other alternative small business lenders to consider.
OnDeck offers loans ranging from $5,000 to $250,000 on terms of 3 to 24 months. The origination fee is 2.50%. Your business needs one year in operating history and $100,000 in annual revenue to qualify. The minimum credit score needed is 500.
Swift Capital offers small business loans ranging from $5,000 to $500,000 on terms of 3 to 12 months. The origination fee is also 2.50%, and rates start as low as 9.90%. You need one year in operating history and at least $5,000 in monthly revenue to qualify. A minimum credit score of 550 is needed.
Both lenders also require daily payments, instead of monthly, in case that’s more manageable for your business.
Shop Around for the Best Loan
Shopping around for a loan can be time consuming, but if you want to get the most affordable loan, it’s a must. Your credit score will only be minimally affected if you shop around within a period of 30 days. When doing so, make sure to read all the fine print and compare the total cost of the loans to each other. Some small business loans have factor rates (such as OnDeck and Swift), while others have APRs that are much simpler to understand (like Dealstruck). APRs tend to be less expensive in the long run. Don’t forget to include any fees being assessed as well.