Lending Loop is Canada’s leading peer-to-peer lending platform. After hearing about Loan Loop and after some experience with them, here is a brief overview of how they work, how you can access loans and investments, and how secure they are. You are also welcome to read and leave a comment below.
Since 2014 when the company was founded by Cato Pastoll and Brandon Vlaar, they have successfully loaned over $66 million to small businesses in Canada and have an investor base of over 10,886 investors.
As financial literacy and entrepreneurship become the order of the day, the need for financing and investment has also increased.
To respond to this request, Financial technology companies have designed an opportunity through which small businesses can access investors without much hassle. This way you get the financing you need and I get a diversified investment opportunity. Win-win for everyone! This concept is called “peer-to-peer lending”.
What is the loan loop?
Lending Loop is a peer-to-peer lending platform that lets you lend money to manage your business from ordinary individuals like you and me, at competitive rates and in return, these individuals earn profits on their investment in the form of interest.
Lending Loop serves as an intermediary between you and your potential investor. They eliminate the bureaucratic and stressful need for a loan from traditional financial institutions like banks or credit unions.
It is the first fully regulated peer-to-peer lending platform for businesses in Canada.
Additionally, Lending Loop is subject to regulation that makes it an exempt market broker in all provinces of Canada. Additionally, they are based in Toronto.
How does the loan loop work?
Are you planning to expand your business or consolidate your position in the industry and need a loan or financing method? Or would you like to diversify your investments and earn some interest? Stay tuned for this review.
Lending Loop uses what is called the “crowdfunding” method to pool a loan. In simpler terms, when you apply for a $1,000 loan, the money doesn’t come directly from one person; it will most likely be a $100 mix from 10 different investors. I will explain in more detail in terms of borrower, lender and market.
Borrower loan loop
As a business owner, you have the option to borrow up to $500,000 to finance your business. Although lending through the loan loop is simple and reliable, you must meet the eligibility criteria to borrow. These criteria help them assess your ability to repay the loan you are applying for. Eligibility criteria include:
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The business must be registered in Canada as a corporation, partnership or sole proprietorship.
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Your business must have had at least 1 year of activity.
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It must generate up to $100,000 in annual revenue.
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The business owner must have a personal credit score of at least 600.
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You can also use a free tool on their website, www.lendingloop.ca, to check your eligibility status.
How to apply for a loan loop loan?
After meeting the eligibility criteria, there are just three simple steps left to finance your business! The steps are as follows:
It’s quite simple and will only take about 5 minutes to complete the online loan application. The application form includes questions about some basic information about your business, such as a detailed description of your business and its performance over the years.
Evaluating your application: Once your application is successfully submitted, it is evaluated by the Lending Loop credit team. The team basically verifies the information you submitted, uses that information to determine the best product for your business, and provides you with a personalized offer.
Get paid: You need to review the offer made to you and if you accept it, the investors will fund the loan through the market. After which the money will be transferred to your bank account.
Lending Loop’s loan rates range from 5.9% to 26.5% and can be repaid over a period of 3 months to 5 years.
Loan Loop Investor (Lender)
The Lending Loop offers you and me the opportunity to help grow the economy by supporting small businesses and also earn at least 5-8% profit per year on these investments.
Becoming an investor requires creating an online account, either as an individual or as a company.
Investors are ranked based on the amount you are willing to invest over a 12-month period and other factors such as your investment preferences, financial capacity and the level of risk you are willing to take. They have a questionnaire to help you.
The ranking includes:
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Ineligible Investor: These are investors willing to invest up to $10,000 over a 12-month period.
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Eligible Investor: These are investors willing to invest up to $100,000 over 12 months, meaning your net income must exceed $75,000.
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Accredited Investor: These are investors ready to invest more than $100,000 over 12 months.
With this classification, everyone has a chance to become an investor. Loans are carried out via the market, so each investor must make a deposit of at least $200 into their account on the platform. You can browse the market to choose the type of loan you want to lend to. The loan loop allows for an investment as low as $25 per loan.
Repayment Plan: In the market, the complete description of the loan type, its estimated net return and its quality are present. Depending on the type of loan, Lending Loop ensures that your account is credited monthly with repayments (capital plus interest).
What is Lending Loop Auto Loan?
The platform allows you to activate the automatic lending feature and strategize your investments. This feature allows you to redirect your repayments and lend them out again. You can select the type of loan you want to lend to automatically. This helps you get maximum use and value from your income.
Plans available on the Auto Loan feature include:
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Balanced plan: This plan allows you to invest in all loan qualities, i.e. from A+ to E.
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Conservative plan: This plan only allows you to invest in grades A+, A, B+, B loans.
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Aggressive Plan: This plan allows you to invest in riskier loan categories, namely C+, C, D+, D, E.
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Custom plan: This option allows you to customize the categories of the loan in which you wish to invest.
What is the loan loop market?
The Lending Loop marketplace is where investors interact with borrowers. On this page you can select the type of loan you want to lend to. Loans are graded from A+, A, B+, B, C+, C, D+, D to E, based on the risk involved in the business after a risk assessment by their credit team.
How does Lending Loop make money?
The Lending Loop makes its money as percentages from the borrower and lender. For the borrower, you are charged a setup fee of between 3% and 6.5%, depending on the risk level assigned to your business; it’s one time only, there are no review fees and the money is deducted from the funds after it’s approved.
For lenders, you are charged a fee of 1.5% of your total return. This means that if your expected return is 6.9%, Lending Loop is entitled to 1.5%, leaving you with 5.4% of the total return.
How safe is the loan loop?
Lending Loop is a registered and regulated company. The company claims that all deposits made through the platform are held in trust with a Canadian chartered bank.
As with any investment, it carries risks, which is why the platform always allows you to regulate the risk you wish to take. You also have the opportunity to diversify your investments into different sectors at once.
Advantages of the loan loop
Here are some of the benefits of Lending Loop for borrowers and lenders, including:
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Creating an account with Lending Loop is free.
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Lending rates are much better than average traditional bank rates.
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Reward system: you receive a $25 bonus once you lend up to $1,500 on the platform
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As an investor, you can invest from as little as $25.
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The automatic loan feature allows you to invest without worrying.
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As a small business owner, you can access loans of up to $500,000 to further finance your business.
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You improve the economy by helping small businesses grow.
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The platform is very easy to use: all the loans and investments you need are just a click away!
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The transparency policy of the Lending Loop platform is extremely commendable; You can access their statistics on their website.
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Finally, you benefit from good rates that may not be possible with other financial institutions.
Disadvantages of the loan loop
Here are some downsides to lending money with Lending Loop:
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It’s still relatively new in Canada.
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The Auto Loan feature still has some limitations when it comes to lending.
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Default is always a possibility: sad but true, so it’s advisable to lend money you can easily part with, especially with higher risk loans.
Last words
That was a detailed review of Lending Loop.
As I said, it’s peer-to-peer, still very new to the Canadian public. However, there are many more advantages than disadvantages. Read people’s experiences before lending your money. Reddit is a good place to start. Usually what happens with the best loans is that they are never paid back on time. So be very careful.
Also don’t forget to check out the Reddit threads on the loan loop. This is extremely informative before you decide.
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