LendSquare is not a direct lender. Instead, it's a business credit card refinance marketplace that connects businesses with individuals and institutional lenders. The Chicago-based company was launched in February 2014 by Sebastian Villareal after he realized how difficult it is for even successful small businesses to access credit. Investors in LendSquare's network allow borrowers to repay their card debt by providing fixed term loans at lower interest rates.
LendSquare targets businesses who rely on credit card debt for working capital. Instead of paying the hefty rates of credit cards, businesses can apply for a loan with LendSquare's investors, which allows them to repay their credit card debt at rates as low as 5 percent. LendSquare makes money by charging companies that have over $100,000 in debt a management fee and by pegging all borrowers with an additional interest rate on top of the rate charged by lenders.
As with all lenders, LendSquare's interest rates vary depending on the loan amount, the borrower's creditworthiness and the business' revenu. However, LendSquare guarantees all successful applicants will receive a minimum of 6 percent reduction on their credit card debt. For instance, if you currently pay 16 percent, you could qualify for a 10 percent loan. LendSquare charges borrowers 1.2 percent interest for every 5 percent they save. For example, if a business has a credit card interest rate of 20 percent and its refinance loan is 14 percent, the final rate would be 15.2 percent.
LendSquare has three refinance loan products: micro, standard, and Enterprise. Micro loans are for companies with a debt of $5,000 or less. Standard loans range from $5,000 to $100,000. Enterprise loans can have loan amounts of $100,000 or above. Businesses can request micro and standard loans automatically online, but enterprise loans require borrowers to contact LendsSquare directly before applying. The maximum term is 60 months.
LendSquare has lenders in all 50 states.
The application process takes only a few seconds to complete. LendSquare needs basic information, such as the companys' credit card debt and, the current interest rate. It then passes on this information to their network of lenders. If the loan is fully funded by investors, LendSquare processes the refinance and deposits the money directly into the accounts of borrowers.
LendSquare is not a bank but a network of independent lenders. This sidesteps a lot of the paperwork traditional lenders require and reduces eligibility requirements. Interest rates are always lower than current credit card debt, which can save businesses a lot of cash and free their credit card line of credit for emergencies. Because LendSquare is a regular loan, not a line of credit, using it to repay credit card balance will help businesses improve their credit score. If you pay your loan regularly and punctually. As long as your account is in good standing, LendSquare allows you to refinance your loan again with new investors and further lower your interest rate.