Bond Street began providing loans to small businesses in the United States in 2014. The company offers loans of $50K-$500K for term lengths of 1-3 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.
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. Benefits of the service include:
Bond Street can fund loans for small businesses up to $500,000 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% of the amount of the loan and Bond Street does not charge an application fee.
With interest rates offered for as low as 6% and its lowest APR at 8%, 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%-23% with APRs varying from 8%-25%. 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%.
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.
No Prepayment Penalties
There are no penalties for early payment of loans.
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.
Bond Street is a very new company. It did not make its first loan until 2014 and it was founded by two young Harvard University graduates. If you are considering getting a loan through Bond Street, here are a few areas where we think they might improve. Limitations of Bond Street include:
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
*Star Rating is determined by evaluating APR range, minimum credit score requirement, revenue requirement, length in business requirement, and other related approval data.
Businesses are required to make semi-monthly payments on the 1st and 16th of each month for their loans. Business owners must make a personal guarantee to pay back the loan should their businesses be unable to make the payments. Bond Street also places a lien against businesses’ assets. For some loans, it also places liens against specific collateral.
Types of Loans Offered
Small Business Loans – Up to $500,000
8% – 25%
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