IOU Central is a lending platform that specializes in providing loans to small businesses that don't qualify for financing from traditional sources of credit, such as banks and venture capital companies. Most of the companies that borrow from IOU Central are owner-operated businesses that have daily sales, such as franchises, medical officers and restaurants. IOU Central was launched in 2006 and is based in Kennesaw, Georgia, is a subsidiary of IOU Financial Inc. a Canadian company based in Montreal.
IOU Central acts as a broker to a network of lenders that use IOU Central's website and proprietary credit assessment software as a lending platform. To apply for a loan, simply create an account at IOUCentral.com, provide basic information on your company and choose the loan amount and repayment period you need. At this stage, you can choose to grant IOU Central access to your business bank account, which will give you an instant decision on your loan application; or upload your bank statements and wait for a manual review of your application. If approved, funds will be deposited within two business days. Payments are made by direct debit from the business' bank account.
Interest rates vary depending on your personal and business credit rating, the size of the loan and whether you choose a 6-month, 9-month or 12-month term. IOU Central works off a base rate of around 14%. Interest rate is quoted as a factor rate of the loan principal. For instance, the interest rate on a 12-month loan of 10,000 ranges from 1.2 to 1.3 depending on the risk score of the company. This means the total cost of the loan will range from $12,000 ($10,000 * 1.2) to $13,000 ($10,000 * 1.3). IOU Central uses simple interest, which means you only pay interest on the loan balance and there's no penalty for repaying the loan early. IOU Central also charges a 6% origination.
Loan amounts range from $5,000 to $100,000 and interest is paid daily. For instance, a $10,000 loan with a 12-month term would have 252 daily payments of $47.69 to $51.66, depending on your interest rate.
IOU Central operates in all 50 states.
IOU Central has an automated application process that allows them to make a profit from processing small business loans traditional lenders won't even look at because they aren't cost effective to underwrite. To qualify, you must have been in business for at least 2 years and an annual revenue of at least $125,000. However, most approved businesses have an annual revenue of around $300,000. IOU Central uses VantageScore 3.0, a credit score that looks at the last 24 months of credit history. Applicants with a credit score of at least 660 will be considered.
IOU Central is a fast source of credit for small businesses who only need a loan of $5,000 to $100,000 and don't qualify for a traditional business loan or an SBA-guaranteed loan. The company has an A+ BBB rating and its interest rates are affordable when compared to other alternative sources of business loans.
Its eligibility requirements are not as stringent as those of banks and credit unions. Also, the credit score it uses focuses on the last two-years of credit history, which gives a chance to business owners who may have some financial skeletons in the closet but have made financially responsible choices in the last 2 years.
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