Bond Street began providing loans to small businesses in the United States in 2014. The company offers loans of $50K-$1m for term lengths of one to three years. To qualify for its loans, businesses must have been in operation over two years and have annual revenues of over $200,000.
Bond Street reviews both the business owners' personal credit scores and their companies' financial information to determine if businesses qualify for loans and what rates and terms will apply to those loans. The company states business owners who have a personal credit score of 640 or greater are most likely to qualify for funding.
- Solutions to many situations
- Transparent fee structure and terms
- Investor support for loans
Bond Street lends to established small businesses that have been in business for over two years. The company funds businesses with substantial annual revenues that have owners with decent credit scores who are willing to personally guarantee the loans. Focusing on this type of customer may allow Bond Street to locate lower interest rate loans than lenders that fund startups and businesses with less attractive credit histories.
Bond Street can fund loans for small businesses up to $1 million that can be used for a variety of purposes, including:
- Refinancing Debt
- Purchasing Inventory
- Equipment Purchases
- Hiring Additional Employees
Transparent Fee Structure and Terms
There is a "flat" origination fee of 3 percent of the amount of the loan and Bond Street does not charge an application fee. There are no penalties for early payment of loans.
With interest rates offered for as low as 6 percent, Bond Street's rates for some loans may not be much higher than bank and Small Business Administration loans. Bond Street's rates are also potentially lower than some other forms of funding, including credit cards and advances on outstanding invoices. Bond Street's rates for loans vary from 6 percent-25 percent. In an article in Philly.com in September 2015, Bond Street co-founder David Haber said the average size of a loan issued by Bond Street is $180,000 with an average interest rate of 11.5 percent.
No Impact on Owner's Personal Credit Score
Bond Street performs a "soft" credit check when you initially apply for funding so it does not have an impact on your personal credit score when conducting its pre-approval of your application.
Investor Support for Loans
In June 2015, Bond Street announced it had raised $110 million in financing from a group of investors that includes Spark Capital, Jefferies global investment bank, and according to an article in The Wall Street Journal, celebrity chef David Chang.
- Not as fast
- Limited track record
Not as Fast as Other Alternative Lenders
The fastest Bond Street reports that businesses might receive funding once they have been approved for a loan is seven days, which is longer than other alternative lenders who advertise that funding from their lenders can be received in as fast as one business day. Bond Street also has an online application process that reviews the business owners' credit history, the business' financials, and data Bond Street acquires from other sources, including social media. Although the company states the online application can be completed within minutes, Bond Street can take up to 48 hours to review the application and contact your business, which is more time than many other alternative lending websites that pledge to let you know if you pre-qualify for funding within minutes of your application.
Limited Track Record
Bond Street does not have a lengthy track record of business funding. An article in The New York Times reports Bond Street had to suspend issuing new loans from December 2014 - April 2015 while it searched for additional investment capital and lenders.
Business owners are required to personally guarantee the loans will be repaid should their business default. While this may allow you to get a lower interest rate for a loan, it puts your personal assets (i.e., home, car, savings account) at risk.
Not Available in All 50 States
Bond Street only provides loans to U.S. businesses and it does not loan to businesses in the following states:
- North Dakota
- South Dakota
The Bottom Line
Bond Street is a new venture and it may lack the expertise to locate the best loans for businesses, but the company received substantial investor funding in 2015, so it has access to money to lend and to increase its staff size. If you are a small business that has been established for over two years with annual revenues of over $200,000, and you have a personal credit score of at least 640, you may want to consider applying for a loan through Bond Street. There is no application fee to apply and the online application can be completed in minutes.
Because Bond Street focuses on finding funding for small businesses that have an established financial history and owners with decent credit scores, it may be able to find lower rate loans for its customers. You are required to personally guarantee any loans you receive through Bond Street, which may also lower the interest rate you are charged for the loan, but could put your personal assets at risk if your business can not make its loan payments. Once you are approved for a loan, Bond Street claims it can provide the funding in as little as seven days.
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