IOU Financial is US based out of Kennesaw, Georgia, and is headquartered in Montreal, Canada. The 100 percent paperless company initially started in 2008 because of the credit crunch that banks were putting on small businesses. IOU Financial has funded over $334.7 million in loans. With a $100,000 IOU Financial loan, clients save $9,000 on average.

The company specializes in small business loans and primarily helps businesses with a healthy cash flow. Their typical clients include medical and dental practices, grocery and retail stores, restaurants, hotel franchises, and e-commerce companies. Customers can qualify for up to $150,000, and get funded within just 24–48 hours.

While there are no prepayment, application, or upfront fees, the company charges origination, guarantee, wire transfer, and non-sufficient funds fees. IOU Financial also has strict eligibility requirements.

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The Good

Quick Application Process
While the qualification process could take weeks with some big banks, IOU Financial clients can prequalify in seconds and receive an offer for a loan in 24 hours. The company uses RiskLogic Score methods and has a pre-approval rate of 85 percent.

The small business loan process is fully automated and IOU Financial notifies clients if their credit qualifies in minutes, with just a soft credit pull; the pull does not impact client credit.

From there, the application is free, simple, and can be completed in three minutes. People also have the option to call a small business loan consultant, who can fill out the application for clients over the phone.

Small Business Loans
IOU Financial can provide funding within 24–48 hours, and is geared toward businesses that are small retail or merchant-driven. Funding ranges from $5,000 to $150,000, and clients can choose a six-, 9-, 12-, 15-, or 18-month repayment-term. Customers looking for more than the maximum $150,000 can renew their loan once it is 40 percent paid down. The loans work with a fixed daily payment, and payments are taken directly out of the client’s bank account. The company works with true small business loans, and not with cash advances.

There are no prepayment fees, and IOU Financial was endorsed for honesty, value, and direct approach by Kevin O’Leary from ABC’s Shark Tank. IOU Financial complies with federal, state, and local regulations, and is licensed in the states it does business with.

Convenient Features
Not only is IOU Financial transparent, the company offers a variety of convenient features, including a live chat feature and a loan calculator. The live chat feature allows customers to receive immediate answers to questions, and the loan calculator estimates how much one’s business can borrow with IOU Financial.

The Bad

IOU Financial is very transparent about its fees. While the company does not charge prepayment, application, or upfront fees, IUO Financial does charge a variety of other fees, including:

  • Origination Fee: IOU Financial charges an origination fee of 8.8 percent of the loan amount. The fee is a one-time occurrence, and renewed loans only charge a 7.8 percent origination fee.ds
  • Wire Transfer Fee: Instant 24 hour funding from wire transfers result in a $95 processing fee. Anything after the first wire transfer will only cost $35.
  • Non-Sufficient Funds Fee: Payments that fail from insufficient funds are charged a $25 fee. This fee can also occur if the client closes or changes their bank account before the loan is completely paid off.
  • Guarantee Fee: This fee depends on how high risk the client business is since IOU Financial is not insured against losses by government agencies. The fee helps offset default costs from small business lending services.

Strict Eligibility Requirements
IOU Financial has strict eligibility requirements. In order to qualify for IOU Financial, applicants but own at least 80% of the business, or at least 50 percent if co-owned with a spouse. The applying company has to have been in business for at least one year. The client should have daily deposits, and generate at least 10 deposits per month into their business bank account. Lastly, the client must have an average balance of $3,000 per day in the business bank account, and annual revenue of at least $100,000.

The website does not advertise a mandatory credit score requirement.

Website Lacks Information
While the website is very upfront with their small business loan information, it does not clearly specify if IOU Financial requires collateral. Additionally, the company does not explain state availability, and if they work outside of Georgia.

The Bottom Line

IOU Financial is an A+ rated and BBB accredited small business loan provider. The company is transparent with their small business loan information and clearly, lays out all fees. The application process is paperless, quick and convenient. Clients can enjoy no upfront, prepayment or application fees, and funding ranges from $5,000 to $150,000. In fact, IOU Financial can fund customers within 24–48 hours.

Eligibility requirements are strict, and may disqualify many interested applicants. The small business loan process is meant for businesses with a healthy cash flow. For clients that meet IOU Financial’s requirements, this highly rated company is worth exploring for small business loan services.

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