Today’s small business owner faces a unique problem when trying to obtain financing in the form of a small business loan: the value of an idea is often overlooked by traditional banks.
Historically, small business financing was offered almost solely on the value of an idea, but with the rise of the credit score, income tax returns, and other documentation being used as backing for small business loans, obtaining financing based on a fantastic idea became almost impossible.
However, as crowdfunding rose in popularity, the smartest minds in business are realized there is a need for more flexible, individualized small business loans.
Streetshares isn’t a traditional bank. Instead, it is a marketplace (also known as a peer-to-peer lender), where Streetshare investor members review loan requests and business pitches in the Streetshare Marketplace, and then compete with each other in an auction to fund different parts of each loan.
The investors that offer the lowest interest rates for each small business loan “win” the auction and then fund their portion of your Streetshare loan – up to $50,000.
Plus, you have the opportunity to lower your interest rate by sharing your business plan, as well as your background and the story behind your business.
- Instant Pre-Approval with online application
- Terms from 6 months to 36 months
- The ability to lower your rate by sharing your story
- No prepayment penalty
- Loans are unsecured
- No application fee
- No obligation to accept a loan after pre approval
- Origination Fee: 3.90% - 4.90%
- Failed payment fee of $10
- Late payment fee of $10
- Weekly, automatic payments
- Loans on up to $50,000
What Type of Business Will Benefit The Most?
Business that lack the ability to obtain traditional funding are excellent candidates for a StreetShares loan. Many lenders require at least $100,000 in annual revenue to qualify for a loan, as well as several years’ tax returns.
Because there are no minimum revenue requirements, no personal collateral, and the ability to lower your rate by sharing your business plan and story, businesses that have been incorporated for at least a year can get access to the funding they need without as many hoops to jump through.
How To Apply
StreetShare applications must be done online or over the phone by calling (800) 560-1435. It takes less than 10 minutes to obtain pre-approval. Once you are pre-approved, and your loan is being “bid on” in the StreetShares marketplace, you are under no obligation to accept your loan. If you do accept the loan, money is available within a few days.
In order to apply you must:
- Be a US citizen or permanent resident
- Have been in business for at least 1 year
- Be bringing in revenue from your business
- Be incorporated or a single member LLC
- Have a business guarantor with at least “reasonable credit”
You will need the following documents:
- Business Tax ID
- Social Security number of business owner
- Most recent personal and business tax returns
- 2 most recent bank statements
- Download of your business checking transaction history for the last 6 months
- Total outstanding debt and monthly debt payments
Fine Print Alerts
Loans through StreetShares are unsecured – meaning you won’t need physical assets like a house or car. You do, however, need a business guarantor with at least reasonable credit. StreetShares does not define what it means by reasonable credit.
Payments are made via automatic, weekly deduction from your business checking account. If an automatic payment fails, a failed payment fee of $10 is charged. If any payment is not received within 7 days of the due date, another $10 fee will be charged.
Origination fees are charged if a business borrower accepts a loan. The origination fee will be pre disclosed, but varies from 3.90% - 4.90%. The origination fee depends on length of term, risk, and the amount of the loan.
How it Stacks Up
As far as peer-to-peer lenders go, StreetShare is very open about the fact that it is higher risk for investors than other lenders like Lending Club.
Lending Club allows small businesses to borrow up to $300,000 with APRs ranging from 9.77% to 35.98% with terms from 6 to 60 months. It doesn’t require collateral for loans of less than $100,000, and offers alternative payments arrangements if you are having trouble making your monthly payments.
FundingCircle is another good alternative to StreetShare. It offers loans ranging from $25,000 to $500,000 with repayment terms of 6 to 60 months. Funding Circle’s origination fees vary from 3.49% - 6.99%, and it offers APRs from 4.99% to 22.99%.
If you need small, more frequent repayment terms, then OnDeck is a great alternative with fixed daily payments. It offers loans from $5,000 to $500,000 with terms of 3 to 36 months. Its origination fee is 2.50% - 4.00%, and you must have 1 year in business and $100,000 in annual revenue to qualify for the loan.
StreetShares is a Great Option for Select Businesses
Street Shares is taking a step towards making funds available to every small business. Right now, it only offers loans up to $50,000[/StreetSharesSBLLoanAmount], which is rather small when compared to other lenders. But with the minimal documentation and revenue requirements, StreetShares is an excellent option for small business that lack access to funding through larger or more traditional lenders.