Save time on comparing multiple business loan offers and get the application help you need.
Running a business is more than a full-time job. When you’re just starting out or short on resources, chances are you simply don’t have the time to find financing on your own, even if you need it.
This is where business loan marketplaces can help. They cut down on the time it takes to find a lender that meets your needs while providing resources to help you along the way. Read more to learn if business loan marketplaces can help your business.
Our top pick: Lendio
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
- Minimum loan amount: $500
- Maximum loan amount: $5,000,000
- Free business loan connection service
- Quick online application
- Requirements: Personal credit score of 560+ and business bank account.
What exactly is a business loan marketplace?
A business loan marketplace is a service that can connect you with multiple lenders after filling out a basic application, usually online. The main function of a business loan marketplace is to reduce the amount of time it takes to find a lender that meets your business’s needs. On top of that, many offer resources to help first-time business loan borrowers navigate the process.
Using a marketplace to find a lender is usually free for borrowers, though some charge a service fee.
Compare top business loan marketplaces
How do business loan marketplaces work?
Business loan marketplaces work a lot like online direct lenders at first glance. You typically have to fill out a brief application with basic information about your personal and business finances. But instead of getting one offer that you might qualify for, you’ll receive several from different lenders. Some marketplaces show all your options at once. Some give your contact information to their partners, who in turn reach out to you. Others do a combination of the two.
Some business loan marketplaces are more involved than others. While many free services stop after you choose a lender, some paid services like BoeFly will continue to help you with your application and even pull strings with their partner lenders to make your application go through as quickly and smoothly as possible.
Business loan marketplaces are great for speeding up the amount of time it takes to find a lender or get assistance. However, you’ll always be limited to their network of partners and might not find the absolute best loan out there for your business needs. This is particularly true with free online marketplaces, which often use a pay-per-lead business model that makes its money from the number of potential borrowers it brings to a lender. These might not have your best interest in mind.
Should I consider applying through a marketplace for my business loan?
When marketplaces can be great…
- You’re short on time. Marketplaces can cut down on the time it takes to find a lender that’s right for you without having to settle on the first one you find.
- You’re not sure where to start. Many marketplaces offer resources and guidance for customers who haven’t taken out a business loan before.
- You’ve been rejected before. If you’ve been rejected after applying for a loan more than once, you might have better luck if your selection is filtered to lenders with eligibility requirements you can meet.
- You want to explore unfamiliar options. Most offer a wide range of loans and can connect you with financing you didn’t know your business could qualify for.
Where they fall short…
- Giving you every option. True, some marketplaces have wide networks, but you won’t be able to compare absolutely every financing option out there.
- Prioritizing your needs. The pay-per-lead model many marketplaces use means it’s in their financial interest to keep lenders satisfied, not you.
- Protecting your contact information. While using a marketplace doesn’t necessarily increase your risk of identity theft, you might end up fielding calls and emails from multiple lenders, even after you take out a loan.
Business loan marketplace vs. direct lender
|Business loan marketplace||Direct lender|
|Application process||Fill out an application, get offers from several lenders and then continue with application through direct lender.||Fill out application to prequalify if available, review offer, submit documents and additional information and then sign loan documents if approved.|
|Fees||Some are free, while others charge a membership fee, flat-rate per loan or both. The direct lender will charge interest and fees according to your loan term.||Usually no application fee. The cost of business loans might include origination fees, SBA guarantee fees, prepayment fees, late payment fees and more.|
|Sharing of information||Shares your personal information with vetted lenders who can use it for marketing purposes, with an option to opt out.||Generally doesn’t share your information with third-parties for marketing purposes.|
Is a marketplace the same as a peer-to-peer lender?No. Peer-to-peer business lenders connect borrowers with funds from investors who finance your loan. They often offer a couple of loan products that come with interest rates, fees and terms that the peer-to-peer lender sets.
Marketplaces are connection services that tend to have many more loan options and don’t set the rates, fees or terms of loans. They’re a stepping stone to direct lenders, while peer-to-peer lenders are one-stop shops.
Despite these differences, it’s not uncommon to hear the terms peer-to-peer and marketplace lending used interchangeably. Some peer-to-peer lenders even refer to themselves as “peer-to-peer marketplaces.”
If you’re not sure which one you’re dealing with, you can usually get a clue from the way it works. If it mentions connecting you with investors, you’re probably looking at a peer-to-peer lender. If it mentions connecting with lenders, it’s likely you’re looking at a business loan marketplace.
Business loan marketplaces could be a great resource if you don’t have the time to compare lenders on your own or need help with the application process. But be aware that you’re restricted to their networks of lenders and they might not always have your best interest in mind when it comes to their bottom line. You also might have to field calls from lenders even after you’ve signed off on a loan.
Not sure if a marketplace is right for you? Check out our guide to business loans to learn about your other options.
Frequently asked questions
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