Overview
LoanBuilder, A PayPal Service, has only been around for a few years, but don’t let that stop you from considering this small business loan. LoanBuilder Loan was originally offered by Swift Financial, a company that was acquired by PayPal in 2017, giving the company not just a brand name, but a wealth of business experience.
From a first glance of this review, we can see what sets LoanBuilder Loan apart is its competitively-priced, fixed fee business loans. LoanBuilder Loans are also touted as having faster turnaround times for funding than the competition.
Though LoanBuilder Loan is a product through PayPal, having or maintaining a PayPal account is not a requirement for receiving a loan. Small business owners with a short-term need are welcome to apply, provided they understand that all loans are for durations less than one year and amounts range from $5,000 to $500,000.
- Loans available in all 50 States + District of Columbia
- No origination or early repayment fees
- Meet a variety of short-term funding needs
- Borrowers with less than sterling credit may be eligible
- Checking eligibility will not affect your credit score
- Fast time from application to funding
- If approved, funding a fast as the next business day
- Terms and fees are not entirely clear
- No benefit to early prepayment
- Several industries excluded from borrowing
- Long-term financing not available
Services Offered & Types of Funding
LoanBuilder Loan offers one type of funding and that is a short-term loan with amounts that range from $5,000 to $500,000. These business loans have a term from 13 to 52 weeks with predictable weekly repayments made automatically from your business bank account so there are no monthly bills to remember.
The single fixed fee charged on a LoanBuilder Loan is amortized over the life of the loan. The fixed fee amount ranges from 6.49% to 19.31% of the loan principal.
The rate a borrower is charged may be dependent upon several factors, including personal credit worthiness, requested loan amount and term desired, business creditworthiness and whether or not it is a repeat loan with LoanBuilder (returning customers may receive a lower rate). LoanBuilder will require collateral in the form of a UCC-1 filing (lien on assets), and the primary borrower will be required to provide a personal guaranty.
Rates and Fees
LoanBuilder Loan’s fee will be assessed up front for the entire amount of the loan. The total interest charge depends upon a number of factors which include the term and amount, the borrower’s credit history, as well as the FICO score of the borrower’s principal officer.
One thing that made us very happy during our LoanBuilder review was that there is no origination fee of any kind. According to their website, the only other potential cost is $20 which would be charged for a returned item (bounced check or payment). As the loan is repaid on a weekly basis and deducted from a designated bank account, it is the responsibility of the borrower to ensure that there are sufficient funds to satisfy the weekly obligation. That weekly deducted amount will not change over the life of the loan. As another added benefit, the borrower can choose the day of the week which best meets their own needs.
Borrower Qualifications
LoanBuilder Loan’s minimum requirements for its borrowers are the following:
- The business must have been operating for a minimum of nine (9) months and have annual revenues over $42,000.
- The business owner’s personal credit score must be a minimum of 550
- Borrower must not be in Chapter 7 or 11 bankruptcy (though it is unclear whether they would lend if the bankruptcy was discharged).
While LoanBuilder Loans are available to borrowers which operate in all 50 states and Washington, DC, there are a number of exclusionary industries and services which they do not support. Those types of excluded businesses include the “usual excluded industries,” such as gaming and gambling, gun stores, collection agencies, auto, motorcycle and RV dealerships, etc. However, the exclusionary list has some “surprising” industries, including attorneys, financial services, agent/managers of public figures, and public administration, plus a whole host of organizations and industries, including schools, environmental, healthcare and labor and political organizations. A complete list of excluded industries can be found on the LoanBuilder website.
Application Process
As is typical of alternative loans, the process starts with an online application.
The completion of the online questionnaire should take less than about 10 minutes, and requires providing information which can be categorized as follows:
Loan Amount/Use – You will be asked how much you would like to borrow, what term do you hope to be approved for and the use of the proceeds of the loan.
Personal – You will need to give your personal information, including name, address, contact numbers, email address. For verification purposes, you will be required to provide your Social Security number.
Business – You will provide the company’s name, address, and phone numbers, the industry type and sub-industry category, the entity type (sole proprietorship, partnership, LLC, etc.), your stake in the company as a percentage, the date your company began operations, number of employees, annual revenues, and federal tax ID number.
The data you have provided will be used to come up with an estimate loan amount and total interest charge. A soft pull of your credit history at this time will have no impact on your future credit score.
Once you are provided with a determination of eligibility, and if you are pre-approved, you are permitted to customize your package (within the parameters given). That way, you get the best loan amount, fixed fee and repayment term that will fit your design. After you have decided on the terms and conditions, you will be required to formalize the process by undergoing a more thorough application process. Additional documentation may be required such as financial statements for the business, as well as the most recent statements from your US-based bank.
You should be aware that once you have been pre-approved, a hard pull on your credit history will be performed which could have an effect on your credit score. If the loan is approved, you will sign an electronic agreement and designate the account into which you will want the loan proceeds transferred. Funds may be transferred into your designated business bank account as fast as one business day; the transfer will come from the lender, WebBank, Member FDIC. Thereafter, the loan payments will be deducted on the same day each week (as per your designation).
An applicant who is denied a LoanBuilder Loan is encouraged to reapply after 30 days. Their customer service team may reach out to you to discuss the application and reasons for the denial so that those issues might be addressed if you decide to reapply.
Help & Support
Before PayPal acquired Swift Financial, comments and reviews about the support team were rated as hit or miss. Since 2017, however, the company has stepped up its efforts to improve its support service, especially as it relates to its phone-based support which received a J.D. Power award in 2017 for providing an “outstanding customer service experience.” To that end, their customer service team is available six days a week by phone or email, and also have a presence on social media via Facebook, Twitter, and Instagram.
The LoanBuilder website is also a good source for “generic” information, as their FAQ page answers many questions that a potential borrower might ask.
User Reviews
Because LoanBuilder has only been in “operation” officially since 2017, many of its profiles at customer review sites have only a few user-based reviews. Prior to then, most of the reviews were on LoanBuilder’s predecessor, Swift Financial, which had a A+ rating with the Better Business Bureau and a generally positive presence on Trustpilot.
Under Swift Financial/LoanBuilder, Trustpilot shows 4,065 reviews, with 91% of those giving them a 5-star rating. Just a quick look at the first few pages of recent reviews there, all of which would be attributed to LoanBuilder, it’s clear that that have made great strides to improving their customer service game. Most comments appreciate the quick response time to funding and the assistance of specific customer service members.
Most negative reviews seemed to be about a lack of communication or understanding, whether on the part of the borrower or the customer service member is unknown. Other negative comments were in regard to the weekly payments and the high interest fee charged, all of which is clearly communicated to the borrower.
Final Thoughts
If a short-term business loan just to “tide you over” during a rough patch is all that is needed, then LoanBuilder could be a good fit. The application process and pre-qualification can tell you if you are eligible within minutes, and if approved, funding can happen as fast as one business day. But the convenience of the process may not be worth the trade-off for some borrowers.
It must be well understood that no LoanBuilder Loans will exceed a 1-year term, and repayments on a weekly basis may be more difficult to meet than a traditional loan with a longer repayment schedule. Moreover, there is no “benefit” to a borrower who wants to repay their loan earlier because there is no saving of the interest, simply because it is evenly spread out for the life of the loan.
