Dealstruck is a peer-to-peer lending platform that provides affordable medium-term loans for small to medium-sized businesses. The San Diego company was launched in 2012 and provides a similar service to Lending Club and Prosper but specializes in established companies that don't quite qualify for traditional bank business loans but shouldn't have to resort to expensive short-term business loans.
Dealstruck offers businesses three types of loans depending on their characteristics and needs: business term loans, revenue secured term loans and asset based lines of credit.
Business term loans are the traditional lending format we are all used to with the best of crowd-sourcing, which allows for more favorable loan terms.
Revenue secured term loans are a good solution for companies with little in the way of assets and profitability that still want low interest rates. It requires companies to direct all their revenue to a bank account managed by Dealstruck where a reserve of three to six months of loan payments is built up. Once the reserve amount is reached any surplus after the current month loan payment flows back to the business' bank account. This reduces the risk for lenders and lowers interest rates.
Asset based line of credit is an attractive option for businesses with considerable assets in accounts receivable that are looking for more reliable cash flow. The business submits their accounts receivable to Dealstruck which calculates a borrowing base using the outstanding invoices as collateral. This provides security to investors and better rates for borrowers.
Interest rates vary widely depending on loan type but range from 10% to 38%.
Business term loans and revenue secured term loans have a maximum loan amount of $250,000. The maximum loan amount on asset based lines of credit depends on the annual revenue of the company.
Business must apply online by posting a loan request with details on the loan amount, term and intended use of the funds. If the business meets Dealstruck's requirements, the loan request is posted for up to 30 days. To qualify companies must be profitable, have annual sales of at least $250,000 and at least one year in business.
Borrowers have to provide a minimum of three months of detailed bank statements by either giving Dealstruck access to their business bank accounts or by uploading the documents manually.
If investors fully fund the loan, the funds are transferred to the borrower's bank account minus a 2 to 5 percent origination fee charged by Dealstruck.
Dealstruck provides low interest loans that compete favorably with traditional bank loans and leading peer-to-peer marketplaces, such as Lending Club and Prosper. However, other peer-to-peer marketplaces have much lower loan amount limits. Dealstruck also offers longer repayment terms and an all-digital application process, which allows for more flexible terms and a simpler application process.
Although less stringent than banks, Dealstruck still is selective about which companies it does business with, which allows them to offer competitive rates. Therefore, many startups and companies with modest annual revenues will not qualify for a loan.