What is Lending Loop?
Lending Loop is a Canadian peer-to-peer lending company headquartered in Toronto. Using an online platform, they provide loans to Canadian small businesses that are funded by individual borrowers pooling their money together. Lending Loop is fully regulated, with a mandate of connecting investors with small businesses that are looking for affordable ways to borrow.
How Does Lending Loop Work?
It all begins with the borrower. A small business applies for a loan using a simple, online application. Lending Loop evaluates the application, taking into account a number of factors, such as the company’s financials, as well as their creditworthiness.
Once Lending Loop has determined that the company qualifies for funding, their request is placed on the Lending Loop Marketplace (more on that later). Individual lenders can now view the company’s loan request, and decide if they want to lend their money to that particular company.
Not all borrowers are equal, however. During the evaluation process, Lending Loop assigns a risk rating to each loan, ranging from A+, for the lowest risk borrowers, to E, for the highest risk. The higher the risk, the higher the interest rate that’s offered to individual lenders. Returns can range anywhere from around 6% to 26%.
The loan remains in the marketplace until enough lenders come forward to fully fund the loan. Depending on the size of the loan, the process can take anywhere from a few days to a few weeks, to sometimes not funding the loan at all, and the request being withdrawn.
How to Sign Up with Lending Loop
Lending Loop makes the signup process easy for lenders. The first step is to give them the necessary personal information. They will require your Social Insurance Number for tax purposes. From there, you’ll complete a short questionnaire, to help Lending Loop better understand your investment preferences.
You then need to make your first deposit into your Lending Loop account, as a transfer from your primary bank account. The minimum investment is $200, but after that, you can invest in increments of $25. Using my link, we’ll both receive a $50 bonus once you lend $1500 to businesses on the platform.
Once everything is confirmed, you can begin perusing available lending opportunities in the Lending Loop Marketplace. This is when you can also set up the Auto-Lend feature, which automates the process based on the risk you select. You can also setup recurring deposit completely setting up your investment in autopilot.