Daric was founded as a way to offer peer-to-peer lending for individuals and small businesses through a marketplace system. Independent investors provide the financing through an automated system that saves time and money. The founders of the company have backgrounds in various fields of math, engineering, and science, and they claim to be backed by top executives in the finance and technology industries.
Through their proprietary software, Daric connects borrowers to investors, with the underwriting process handled by software algorithms. The purpose of the automated system is to pass along savings by decreasing borrower rates while at the same time boosting lender earning. All of this is done through a simple, beautifully-presented interface that is easy to navigate. In fact, Daric is so proud of their innovative technology that they have even begun licensing it to various banks and financial institutions. Other benefits include:
Unsecured, Fixed Loans
Daric loans are unsecured, so no collateral is required. They are also fixed loans, so the APR will not change for the life of the loan, and they promise no surprise fees. The process has been streamlined into a few basic steps. First, borrowers register an account and provide bank account information. Then they apply for a loan. In most instances, no other information or documentation is required. At that point, borrowers can apply for a loan.
Once approved, the loan is posted to an online platform, where investors can view it and decide whether or not to provide the requested funding. Once a willing investor is found, the funds are deposited directly into the specified bank account. Compared to other similar marketplace-type loan companies, Daric’s system is straightforward and efficient. The repayment system is based on automated withdrawals from the same bank account, which most borrowers will find convenient.
Loan amounts are available from as low as $1,000 to as high as $50,000, so it should cover many small business expenses, such as new equipment purchases, renovations, and expansions. Daric doesn’t charge borrowers any fees until they actually receive their funds, so there is no financial risk in registering and applying for a loan. The rates for the loan vary depending on a businesses’ financial history, and APR can be as low as 6.78%, which is definitely a nice, competitive rate.
Rates are determined by a grading system that assigns a Loan Grade of A1 through G5 to borrowers for each individual loan based on the borrower’s financial history combined with the size of the loan. A business that earns an A1 rating is going to be privy to some great APR rates, among the lowest on the market.
Repayments occur on the same day every month that the loan was made. So, for example, if the loan was made on the 15th, the first repayment with be on the 15th day of the following month. This should make it easy for borrowers to keep track of their repayment schedule.
Despite having the ability to help small businesses obtain a loan for various reasons, Daric does not offer everything some owners may consider vital. Prospective borrowers should be aware of the following items:
The biggest drawback to Daric is the scarce amount of available information about the company itself. In fact, it’s practically an online mystery. The website offers very little specific information about company history, and although there is an “Executive Team” subheading on the “About” page, it is currently blank. Rooting around on other websites doesn’t do much good. Daric is present on social media, but their Twitter account only has 9 tweets and 92 followers and their Facebook page is practically blank. This might put off many potential borrowers, as well as investors.
Confusing Loan Terms
Loan Grades offer a huge difference in estimated rates. For the highest Loan Grade of A1, the example APR on the website for a 36-month terms is 6.78%, but for the lowest grade, G5, the example APR for a 36-month term is 19.99%, which is not so impressive. While it is understandable that higher risk borrowers and loans would get worse APR, it makes it almost impossible to know what sort of rate to expect until you go through the actual application process.
Loans are only offered in either 36 or 60 month terms. There is no other option, so it’s not the most flexible system. Smaller loans are always fixed at 36 months. Borrowers wanting shorter or longer term loans will want to look elsewhere.
Daric provides an online APR Estimator, but its accuracy is questionable as the estimator doesn’t factor in credit score. However, a credit score of at least 660 is required for an application to be considered. Also, if a credit score is 740 or higher, there must be fewer than 9 credit inquiries on record in the last 6 months. With a credit score below 740, there must be fewer than 4 credit inquiries. This is higher than some other loan company requirements.
There are several requirements to be eligible for Daric’s loan system. Here are just a few:
- At least 3 years of credit history
- A debt-to-income ratio below 35%
- No bankruptcies in the last 7 years
- Credit cards cannot be maxed out
- No charge-offs
- No medical collections in the last 12 months
- No delinquencies
The origination fee can be up to 5%, and while this is comparable to many loan companies in the industry, there are definitely competitors who offer lower fees. Funding is usually processed in just a few days, but Daric readily admits that it can take up to 14 days to get the money in some instances. Also, if the investor does not provide at least 60% of the loan by the end of the 14 days, Daric will cancel the loan.
Since borrowers are dependent on willing investors to fund the loan, it is impossible to know how long they might be waiting. It’s up to individual investors to determine whether or not they want to accept any particular loan application. It could happen in a few hours, or it might take days.
*Star Rating is determined by evaluating APR range, minimum credit score requirement, revenue requirement, length in business requirement, and other related approval data.