PayPal’s LoanBuilder offers an unusually high level of transparency to prospective borrowers, allowing them to see — and even tinker with — the terms of their loans well in advance of signing on the dotted line.
This is a welcome trait in an industry where speed and low barriers to entry take precedence over openness and affordability.
As we oftenÂ warn in our reviews, however, it’s a good idea to compare as many different products as you can to get the best deal you can.
So what are some alternatives to LoanBuilder for small business?
Best for: Square customers looking for small loans with low rates
Square, a company known more for point of sale hardware and software, also offers an alternative lending service to its clients. That last bit will probably be a major deciding factor for most of the people reading this: to get a loan from Square Capital you have to already be an existing Square customer.
|Time in business:||N/A|
If you’re a Square customer, you may periodically get funding offers from the company by email. This passive approach to lending won’t suit everyone, but Square does offer some of the lowest short-term loanÂ rates in the business (between 1.1 and 1.16). If you accept the offer, you’ll have up to 18 months to repay the loan. Micropayments are deducted from your daily credit card sales until you’re paid up. You can borrow between $500 and $100,000.
This arrangement may not be for everyone, of course. A lot of the advantages come from being heavily integrated into the Square environment — their credit card processing service makes it easy for them to collect on their debt. You may not beÂ comfortable owing debt to the company that also handles your point of sale.
Best for:Â Businesses looking for a transparent alternative lender, businesses looking for medium-term loans
If you’re attracted to LoanBuilder’s transparency but want an alternative, you may want to give Credibly a look. Credibly offers a bit more diversity in their loans than most alternative lenders, providing not just short-term, but more traditional medium-term loans. You can find most of the information you need to make an informed comparison on their website.
|Time in business:||6 months|
|Revenue:||$15K/yr + avg. daily balance over $1K for expansion loans|
Compared to LoanBuilder, you’re probably looking at higher rates (between 1.09 and 1.36), especially if you don’t have great credit, but you’ll have a little more leeway with term lengths. Consider whether the tradeoff is worth it before you commit to anything.
Best for:Â Businesses looking for low rates
This addition to the list probably won’t be a big surprise to anyone familiar with the alternative lending industry. If you’ve been looking for loans online, there’s a good chance you’ve come across OnDeck.
|Time in business:||12 months|
As one of the early arrivals to the alternative lending scene, OnDeck’s had a lot of time to hone their products and offer competitive rates. These extremely low rates (1.003 – 1.04) come at the cost of some additional charges, namely a fairly high origination fee, but you’re still likely to land a better deal here than with many other alternative lenders. Additionally, OnDeck offers lines of credit for companies that want the flexibility.
You won’t find quite the same level of transparency here as you will with LoanBuilder, though the company’s website should give you a decent sense of what types of fees to expect.
Best for: Businesses looking for equipment financing and transparency
SnapCap flies under the radar compared to some of the other funders on this list, but they still deserve an honorable mention. Like Credibly, their rates are a little higher, particularly for borrowers with bad credit.
|Time in business:||1 year|
On the other hand, you’ll be able to find a lot of the information you’re looking for upfront, with only a little digging around SnapCap’s website. While they wouldn’t be my first choice for unsecured loans, SnapCap also offers secured financing in the form of equipment loans. This is where they’re most likely to stand out to prospective borrowers.
Best for: Companies that want to avoid hidden fees
As we often caution, the alternative lending industry isn’t known for its transparency. Kabbage is an interesting case study. The fee structure is a bit more complex than that of many of its competitors, which can make it challenging to compare to other products.
|Time in business:||1 year|
Kabbage, however, takes pains to give you the tools necessary to figure out exactly what you’ll owe. Their website comes equipped with handy tools and explanations of their formulas. The big selling point here is that you won’t have to worry about Kabbage springing any surprise administrative fees; everything’s factored into the rates you see.
Alternative lending is a highly competitive market, so you should never feel like you’re locked into one particular funder. Find a lender you’re comfortable working with that offers you fair terms.
Not sure where to start looking? Check out our small business loan comparison.
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