- With companies like AvantCredit drawing in middle-income consumers, Crowfunder attracting companies with high growth potential, and BlueVine appealing to those with low credit, there seems to be a wide market for lending or financing across every income bracket.
- But as more fintech companies emerge, it can be tough to sift through them and determine which firms will hold the most promise.
- Do you work in the Financial Services industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.
- The following is a preview of our recently published report, Credit Cards in the ‘Next Normal’. You can purchase this report here.
Personal loans can be useful for everything from consolidating high-interest credit card debt to financing major expenses. As more lending and financing companies join the fintech space, it’s important that consumers compare various lenders to find the best loan for their individual needs.
Insider Intelligence has put together a list of the top lending companies, including AvantCredit, Zopa, and Bond Street. Learn how each of these firms ranks in areas like competitive interest rates, loan term offerings, and inclusive eligibility requirements. We’ll offer insight on what has led to each company’s growth, and what it means for the future of the financial services industry.
AvantCredit, a subsidiary of Avant, was founded in 2012 to improve the borrowing experience for middle-income consumers. The company boasts to have lent over $6.5 billion. It’s ideal for borrowers who are looking to get funds quickly, have a FICO credit score between 600 and 700, and are interested in managing a loan online.
That said, AvantCredit has a high annual fee, no rewards, an origination fee up to 4.75%, and no direct payment to creditors. Competitors that offer the ability to earn rewards and avoid an annual fee may ultimately win over customers.
Founded in 2005 in the UK, Zopa is the largest and oldest peer-to-peer company that survived the 2008 financial crisis. It now has more than 75,000 active investors who have lent over £3 billion to borrowers. As with other social lending sites, loans can be exchanged between individuals without the involvement of a bank, which can mean lower interest rates and fees for the buyer.
However, loans are unsecured and you are tied to the terms of the agreement, so lenders must be aware of defaults and withdrawal fees that can make them lose money. Lenders may not receive the interest rate agreed upon with the borrower, as the site may take around a 1% cut. Business loans are also only available to sole traders, those ages 20 and older, with a minimum two years of trading experience.
Founded in 2013 by David Haber, Bond Street launched as a peer-to-peer lender as an alternative to traditional lending options. It offers borrowers a quick and seamless application process and access to loan funds up to $1 billion. The company offers rates between 8% and 25%, and allows borrowers to pay off their loan at any time without penalty.
Despite these advantages, there are some potential downsides. Bond Street requires a credit score of at least 640, and it calls for borrowers to have a business that is at least two years old, which earns a minimum annual revenue of $200,000. Borrowers will also have to pay an origination fee between 3% and 5% of the amount they borrow.
SoFi’s $0 reading commission and $0 account minimum make it an appealing option for new, cost-conscious investors, as other robo-investors may charge a management fee of 0.25% or more. Many may also find value in SoFi’s member bonuses, such as its career coaching and interest discounts on student loans.
However, the company’s lack of investment choices like mutual funds and bonds is not ideal for those saving for retirement. Unlike some of its competitors, SoFi doesn’t offer tax-loss harvesting, which can reduce taxes owed on investment gains. What’s more, since the company launched in 2017, it’s not as established as larger players, such as Wealthfront and Betterment.
Assetz Capital entered the market in the UK in April 2013, and has since funded a total of 4,846 new homes and has grown to be a top 6 peer-to-peer market player with more than 30,000 active lenders.
Investors are able to prioritize according to need, and spread their investments across different accounts in preferred proportions. Those looking for a higher rate of return may opt for automated and manual lending accounts, while those looking to easily return cash without a commitment can leverage access accounts.
During the pandemic, Assetz Capital was quick to release capital when investors pulled out their capital rapidly, which caused problems with liquidity. But many users are confident they will continue to rebound from this as we transition into the new normal.
Funding Circle has helped more than 81,000 small businesses worldwide secure $11.7 billion in financing. It provides each customer with a personal account manager who takes the time to better understand and meet their individual business needs.
While they offer competitive rates without fees, borrowers may have to pay interest and an origination fee. In addition, while they do offer medium-term installment loans to established businesses, their requirements rule out younger and smaller businesses and start-ups.
Younited Credit, formerly known as Prêt d’Union, was founded in 2009 as a peer-to-peer lending platform headquartered in Paris, France. It was designed to offer hassle-free loans and credit directly from individual lenders at a much cheaper interest rate. The fintech start-up holds its own license as a European credit institution, offering consumer loans in six countries: France, Italy, Spain, and Portugal, Austria, and Germany.
While the company offers especially low rates starting at only 5.18%, it makes a profit via a management fee up to 2%, which is taken from a loan before it is paid to an account.
In the real estate market, buyers need to act quickly when looking to land their ideal home, which can be challenging when trying to sell their current residence at the same time. Orchard, a private lending company based in Scottsdale, AZ, counters this obstacle by offering cash for buyers who want to make an offer before they have moved.
The benefits are that consumers don’t have to pay more than one mortgage at once, the purchase of their new home is not contingent on the sale of the old one, and they can cancel any time without penalty.
Buyers should keep in mind that Orchard is only available to marketers, and there is a strict qualification criteria. The company charges a 6% service fee, and also requires that its borrowers keep paying their mortgage until their old house is sold.
LendUp was established as an alternative to payday lenders. They have no credit requirement, which appeals to those with lower credit, and they also offer a quick distribution of money for those who need funds right away. The company also offers credit education courses through its website that cover credit building and consumer credit rights.
LendUp is not recommended for those trying to build credit or for those who have cheaper options for getting cash, as its small, short-term loans can carry high interest rates.
Prosper was founded in 2005 as the first peer-to-peer marketplace lender in the US. Prosper is not a bank and therefore does not do any lending of its own, but instead allows investor-lenders to pool their money together and loans funds to those who need them. By removing the banks from the process, Prosper is able to offer lower interest rates.
While their risk model received criticism from investors who got negative returns during the economic crisis, they have since made improvements, and have facilitated loans for more than 890,000 people of over $14 billion dollars.
Founded in 2012, San Francisco-based financial services company Affirm operates as a lender of installment loans for customers to use at the point-of-sale to finance a purchase. The company has thousands of partners that offer buy now, pay later (BNPL) options. Consumers can prequalify with a soft credit inquiry and there are no fees. There are also no refunds for interest paid on any items returned.
However, if consumers don’t qualify for the full amount of a purchase, Affirm may require a down payment. There are also no refunds for interest paid on any items you return.
German peer-to-peer loan marketplace auxmoney was founded in 2007. Its platform enables private consumers to borrow from private investors for personal loans, providing borrowers with a bank-free borrowing system and offering lenders a return on their investment.
While much of the German loan market is characterized by traditional scoring methods and manual processes, auxmoney is setting new standards by using automation to provide more people with easier access to loans.
OnDeck got its start in 2007 as one of the first lenders to rely primarily on technology for its lending decisions. It has since delivered more than $13 billion to businesses worldwide.
To qualify, businesses must be at last 12 months old, make at least $100,000 annually, and have a credit score of 600 and above. While it can be relatively easy and fast to qualify, their loans can be expensive depending on the strength of a business. The company also has a maximum repayment term of 18 months, so those who needed a longer term would have to look elsewhere.
LendInvest is a non-bank, alternative fintech mortgage lender founded in 2013 as a leading platform for property finance. It offers short-term, development and buy-to-let mortgages to intermediates, landlords, and developers across the UK. LendInvest has a strong operating history and is profitable, with an international capital base of more than £2 billion.
There is no secondary market, which means there is no exit option. Also, while property development bridging loans have lower interest returns, they can be risky. The policy does not allow borrowers to withdraw funds deposited by debit card for 90 days.
Bondora is a marketplace for peer-to-peer consumer lending that allows users to invest in loans to borrowers in Estonia, Finland, and Spain. Investments can be automated and loans can be traded on a secondary market. Their Go & Grow portfolio allows for fast diversification and withdrawal of funds.
While Bondora has high interest rates, keep in mind that the potential for high returns comes with higher risk. Actual returns are also lower than expected when investing in single loan notes.
Lendio is a small, Utah-based business loan marketplace in the U.S. that was founded in 2011. The company is focused on helping small business applicants whose loans are often rejected by banks. Lendio offers lower loan qualifications and has helped small business owners get over $1.4 billion in loans. It also has long-term financing options, high borrowing amounts, and multiple types of financing options.
However, it’s important to keep in mind that Lendio doesn’t originate business loans, but instead helps to connect lenders and business owners. Rates can be expensive and funds are not disbursed immediately.
LendingClub is an American peer-to-peer lending company that got its start back in 2007 as a peer-to-peer lender. The company has now helped over 3 million customers borrow more than $50 million. It is best for those who have a FICO credit score between 630 and 719, who are looking to build credit, consolidate debt, and qualify for a rate that lowers their interest.
Despite its advantages, LendingClub’s personal loans have higher starting rates than many competitors. There are also not many options for loan repayment term lengths.
Seedrs is an equity crowdfunding platform that was founded in East London in 2012, to help businesses market their products and services to raise money. They have since raised $1 million in seeding funding from investors from well-known venture capitalist firms.
The company partnered with Capdesk in 2020, to create the first private secondary market for shareholders and employees in Europe. Many have been receptive to Seedrs, as it offers liquidity on assets that many competitors do not. The company also offers tax benefits and takes care of the most of the logistics. However, startup investing is known for being high-risk.
Kabbage, Inc is an online fintech company based in Atlanta, Georgia in 2008. The company has provided $2 billion funding directly to more than 84,000 small businesses through an automated lending platform. This is a good option for business owners who need cash immediately or who can’t get approved for a cheaper loan because of low credit.
With high rates between 24% and 99%, users should avoid using Kabbage large equipment purchases or renovations. There is also a monthly fee charged every month when there is an outstanding balance.
Lufax is an internet wealth management platform that provides financing and lending services for small and medium enterprises and individual clients. The company was incorporated in September 2011 in Shanghai with the support of Shanghai’s Municipal Government, and has since become China’s largest Internet finance company.
While many fintech platforms in China have been starting to serve more corporate clients, Lufax is unique in that it targets affluent individuals by offering more specialized services. As the interest in the wealth management segment grows, and private banks and other financial service providers fail to meet this demand, Lufax is able to fill this void and dominate in this emerging market.
However, this company’s imprudence in product selection due to legacy challenges has the potential to scare away investors. Lufax also faces immense pressure from larger competitors such as Alibaba.
The P2P fintech lender was established in 2011, and has since provided over £2.6 billion to thousands of UK businesses. Market Finance has won over customers with their proprietary technology and personalized service that meets their evolving needs. The company is backed by major venture capital groups including Barclays and Santander.
Customers should be sure to watch out for the high fees that may apply for some products. It may also remain unclear what percentage of your invoices you can raise.
Los Angeles-based company Crowdfunder, focuses on changing U.S. laws to make it easier for startups and small businesses to raise funds through equity or revenue-based financing. They also offer access to their network of elite accredited investors.
Keep in mind that Crowdfunder is not a fundraising platform for charities or nonprofits, but instead targeted towards entrepreneurs and companies with high growth potential. While the crowdfunder platform doesn’t take a percentage of the funds that you raise, they charge a usage fee of at least $299 per month.
Crowdcube got its start in 2011, as an online equity crowdfunding platform with appealing marketing features and social media integrations. Unlike Crowdfunder, which is tailored towards wealthy individuals, Crowdcube allows the average person to invest in new private companies for as little as £10.
The company is now backed by Balderton Capital, Draper Esprit, Numis and Channel 4, who have collectively invested more than £19.5m across multiple rounds of investment. Despite its success and tenure, users should keep in mind that early-stage investing is inherently risky with no guarantee of return. Crowdcube also charges investors fees at the time of the investment, rather than at the point of exit.
BlueVine offers small-business owners multiple loan options to meet their short-term financing needs. They are ideal for businesses that need cash in a hurry and for those who have limited options due to low credit. The company has delivered over $3 Billion in funds to over 25,000 customers since its inception in 2013.
With annual percentage rates up to 68%, BlueVine is one of the more expensive business loan options. Businesses will get penalized for customers that fail to pay their invoices. The high frequency of payment could also pose an issue for companies who don’t consistently hold large amounts of funds in their bank account.
RateSetter was first founded in 2010 as a P2P lending platform based in the UK, and is now one of the largest platforms in existence with over 84,000 investors who have funded over £3.6 billion. It is a reputable company that is very secure and reliable, and it’s easy to start investing with only a £10 minimum.
One downside is that it exclusively serves the United Kingdom, so other countries cannot use it to invest.
Interested in learning more about the Financial Services space? Here are some related reports that might interest you:
- The US Wealth Management Ecosystem, which outlines the key players, biggest shifts, and trends driving digital transformation in the $29.1 trillion industry.
- 5G and Financial Services, which covers how this new networking technology will enable better experiences for consumers and better data for banks.
- US Banking Channel Forecast, outlining how shifting consumer habits and the pandemic are reshaping banking usage and informing banks’ investments in branches, ATMs, call centers, and digital and mobile banking.
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