Dealstruck looks for financing options for small and medium-sized businesses from sources beyond the traditional banks and financial lenders. The company goes to individuals who have enough wealth to be accredited investors and institutions to provide businesses with loans and lines of credit. Launched in 2012, Dealstruck says its primary customers are small businesses that cannot get the funding they need from traditional lenders. When a business applies for a loan or a line of credit, Dealstruck connects the applicant with the right lender or groups of lenders through its online marketplace.
Dealstruck states it lends to U.S. businesses in most of the 50 states with owners who are either U.S. citizens or permanent residents of the United States. The company provides businesses with term loans from $50,000 to $250,000 with repayment lengths of 12-48 months.
Dealstruck’s online credit application takes the two most recent years of a business’s tax returns, bank account information, and the FICO score of the business’s primary owners and uses that data to develop a financing plan. Businesses must have been in operation for over a year and have at least $250,000 in annual sales. Dealstruck does not have a minimum required FICO score, but would like the owners’ scores to be above 600.
Types of Loans Offered
8% – 24%
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Dealstruck can offer businesses who may not be able to get loans from banks both term loans and lines of credit. The company seeks out private individuals and institutions that want to lend money and make a profitable return on their investments, while investing in the growth of small and medium-sized businesses. Lenders can review businesses who have submitted applications to borrow funds and select the ones they are interested in funding. Dealstruck actively seeks out small businesses as its customers and accepts applications from business owners who may not have perfect credit and businesses that are approaching breakeven but have not made it yet.
Dealstruck states its goal is to “to create a pathway to more mature financing, which ultimately graduates our clients to a bank or credit union.” Here is what we like about Dealstruck:
Interest Rates Decrease
Interest is charged only on the unpaid principal of the loans, so as you pay off the principal, the amount of interest charged will decrease. Dealstruck states this is different than loans from some other alternative lenders that are “priced as ‘cents on the dollar’ where a fixed amount of interest and fees are owed no matter how quickly the loan is paid back.”
Open to Most U.S. Businesses
Dealstruck states it makes loans to companies in most of the 50 states in the U.S. and accepts applications from a wide variety of industries.
Fast Online Application
Dealstruck will issue a response from underwriting within 48 hours of receiving a completed loan package. Once approved for a loan, the company claims it can fund many customers’ loans in under a week.
Transparent Fee Structure
Dealstruck clearly identifies the origination fees and the APR of its term loans. Dealstruck’s Loan Calculator shows potential customers what their APR and monthly payment will be for term loans based upon their credit score, the dollar value of the loan, and the term length.
Better Business Bureau (BBB) A+ Rating
Dealstruck is a BBB accredited business with an A+ rating based on the small number of complaints against its business (one complaint since January 2014) and its efforts to respond to and resolve that complaint.
Attractive Rates of Return for Investors
In an interview with Xconomy.com, Dealstruck co-founder Ethan Senturia said the company can provide rates of return of between 5-15% to investors. These rates may attract new investors who can provide needed capital for small businesses.Disadvantages of Choosing DealStruck
Dealstruck provides a platform for lenders and borrowers and it needs to make a profit from its services. If you are considering applying for a loan with Dealstruck, the following are factors you need to consider:
Dealstruck charges a 4% loan origination fee that is deducted from the principal of the loan during closing.
Every owner whose ownership interest is 20% or greater must be an applicant on the loan and each of these owners must also personally guarantee the loan. The personal guarantee means the owner is agreeing that should the business be unable to pay the loan back, the owner will use his/her “personal liquidity and assets” for the loan payments.
Rates Higher than Some Banks
Dealstruck admits its rates, which range from 9.99%-29.99%, are higher than traditional banks, but the company claims their rates are lower than some other alternative lenders.
If you pay off your loan early, Dealstruck charges a prepayment penalty of 1% per year of the principal of the loan at the time the loan is prepaid. Dealstruck provides the following example of its prepayment penalty: Paying off a two-year loan during the first year would cost 2% of the principal at the time the loan is paid off. If the loan was prepaid in year 2, the prepayment penalty would be 1% of the remaining principal.
Not Every Industry Qualifies
Although Dealstruck lends to a wide variety of industries, it does not lend to the following:
- Financial Institutions (excluding bookkeepers, accountants, financial advisors, etc.)
- Real Estate Investment and Development Companies
- Medical Marijuana
- Credit Repair
- Collection Agencies
- Residential Contractors
Dealstruck Loans not for Real Estate: The company’s loans cannot be used to finance real estate purchases or to refinance a real estate loan.
*Star Rating is determined by evaluating APR range, minimum credit score requirement, revenue requirement, length in business requirement, and other related approval data.
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