What Is Able Lending?
Able Lending is a small business/startup lender who takes, according to their website, a collaborative approach to providing funding to entrepreneurs and small business owners via a “backer” model similar to crowdfunding.
The company is what’s known as a non-bank lender, which means the money they offer you isn’t financed directly through a bank but rather through investors.
Able Lending started in 2014 under the leadership of Will Davis and Evan Baehr. Davis spent 15 years at JD Capital, eventually becoming the company’s principal. Baehr is well-studied: He holds degrees from Harvard, Princeton and Yale.
At the heart of Able Lending’s business model is a hybrid approach to funding, in which they encourage startups and small businesses with poor credit and/or low revenue to use their crowdfunding platform. If a business is established, then Able can go the traditional route and provide non-crowdfunded loans and financing.
With so many small business lenders out there, it can be tough to know exactly how a company differentiates itself. To get a sense of what makes Able Lending unique, we’ve researched their loan products, application process, rates and fees, and the insights of reviewers other than HighYa.
By the end of this review, you’ll have a pretty in-depth understanding of what Able Lending offers and how they may or may not be able to help you. Able Lending is a hybrid lender because they’ve created crowdsourced and traditional loan products. We’re going to review each type of loan and its features.
Able’s Startup Loans
Rather than using the term “crowdfunding” to describe their crowdfunding platform, Able calls these loans “startup” or “backer” loans. The amount of money you get is provided, in theory, by your backers: friends, family, colleagues, etc. Donation amounts have to be at least $1,000.
Your backer-loan money won’t be available to you until you hit your funding goal, Able says.
Tracks Growth and Metrics
Why do this through Able Lending and not through a crowdfunding site like Kickstarter? Well, according to Able Lending, when you integrate your fundraising onto their platform, they track your business growth.
Once you hit $100,000 in revenue, Able says they’ll augment your initial loan with loans from their investors. In other words, you cross the line from getting money from family and friends to getting a loan from Able Lending.
If you’re still not convinced Able Lending is different than a crowdfunding platform, they’ve got a pretty succinct explanation on their site.
“Crowdfunding is raising a little money from a lot of people without any promise of repayment. Able is raising a lot of money from a small group of people with a promise of repayment (and interest!).”
So, whereas a crowdfunding might promise to its backers a hug or tickets to a launch party, Able Lending’s program charges you interest that’s paid back to your backers. Your backers make money, simply put, on investments you promise to pay back.
Repaying Your Backers
Able’s online platform also streamlines the way you repay your backers – nobody wants to turn their friends and family into debt collectors, the site says.
Another important aspect of Able Lending’s Startup Loan program is that their goal is to keep you from converting your company’s equity into cash and thereby losing small bits of control of your business.
“Friends, family, and fans who fund your Able loan don’t take equity so you can: Retain the vision for your business, choose who to involve in key business decisions (and) fund your business for sustainable growth, not an exit plan,” their site says.
You’ll be charged a set of rates and fees for this program, which we’ll cover in a few sections, but until then know that Able Lending will administrate startup loans up to $1 million.
Able’s Business Loans
Able’s Business Loan program (also known as “growth loans”) is considered a next-step type of lending service for startups but it’s also offered as a stand-alone loan program for established businesses with proven revenue and solid credit scores.
Whichever type of business loan you get, it will be a minimum of $25,000 and a maximum of $1 million.
Backer-Based Business Loans
If you’re moving from startup loans to business loans, or you’re a new business who qualifies for an Able backer-based business loan, your job will be to raise 10-50% of your approved loan amount and Able will multiply what you raise by 2-10 times to meet your funding amount.
According to Able Lending, this hybrid method of lending helps you save money. Their website notes that, on a $175,000 loan paid over 36 months, a business owner with a credit score of 680 can save more than $41,000 compared to loans from traditional lenders.
The more money provided by backers, they say, the more you’ll save. This makes a lot of sense because you’re doing the hard work of finding investors, not Able Lending. You’re saving them manpower and money.
Are these loans as good as low-interest Small Business Association (SBA) loans you could get from a non-bank lender like SmartBiz?
Able Lending answers that question with a side-by-side comparison we think is worth republishing here:
|Able Lending||SBA Loan|
|Funds disbursement||Up to 30 days||Up to 9 months|
|Funding from backers||10-50%||None, up to 33% down payment|
|Application time||10 minutes||Weeks|
What Able Lending offers is certainly more streamlined than what you’d get with the Small Business Administration, but what’s missing here is the fact that SBA loans can be paid back over the course of 10 years instead of the five-year max you get with Able Lending.
Non-Backed Business Loans
Able Lending offers traditional business loans to businesses who have been in business for an established amount of time, whose revenue is solid and whose owners have good credit scores.
Able Lending Refinancing Loans
If you’re looking to refinance existing business debt, Able offers refinancing loans that, according to the site, have an average interest rate lower than all its competitors: 13%.
They also claim that their refinancing options save their customers an average of $5,416 because of the lower monthly payments resulting from your refi.
Like the other loans Able Lending offers, refis have a repayment term of 1 to 5 years. That doesn’t sound like a lot, but many business loans have repayment terms that fall within that four-year window.
Refi loan amounts are between $25,000 and $1 million.
Pro tip: Your refinance may give you lower monthly payments but it will extend your repayment period. Make sure you look at the bottom line, as this can be just as important as what you pay each month.
The Able Lending Application Process
Like some of the other lenders we’ve mentioned in this review, Able’s application process takes place online. You’ll be required to provide earnings information, your social security number and other business-related information in order to complete your application.
In some cases, fewer than 10 days will pass between the time you turn in your application and you receive your funding. However, remember that not every application and funding process will move this quickly.
Also, keep in mind that the initial rates, loan amount and repayment length could change as you provide more information for Able Lending’s underwriting department.
According to their website, you’ll have to meet the following criteria in order to be considered for their loan programs:
- Time in business: 12 months
- Minimum credit score: 600
- Minimum yearly revenue: $100,000
You’ll be required to pledge a personal guarantee on your loans, which means that you’ll be personally responsible for the loan should the business not be able to repay it.
This is, Able lending says, their way – and every lender’s way, pretty much – of offsetting the risk of giving you competitive interest rates.
Loans Not Available in Certain States
One final thought about the application process: Able Lending loans aren’t available in California, Nevada, Delaware, Vermont, North Dakota or South Dakota.
Able Lending Rates and Fees
Anytime you sign up for a business loan, you can expect to pay a few different fees as well as an interest rate that, once you factor in fees, is presented as an APR, which is why the APR is usually higher than the interest rate.
Able Lending’s rates and fees are broken down by loan type: startup loan, business loan and refinancing loan.
Startup Loan - Startup loans don’t have an origination fee but Able Lending will charge you an interest rate between 2% and 18%.
Business Loan - Interest rates for business loans start at 8% and go up from there. These loans also come with a 5% origination fee.
Refinancing Loan - Interest rates start at 8% and have an average APR of 16%. Origination fees for a refi will be 5%, which is on the high end since many lenders offer a range of fees instead of one set fee.
Rates and Fees Summary
We found Able Lending’s lack of prepayment penalties very similar to Funding Circle. The low-end APR on the company’s startup loans are extremely competitive at 2%, but it’s important to remember that business owners with excellent credit scores will be the ones, most likely, who have a shot at this low rate.
Reviews of Able Lending
Review sites NerdWallet and Merchant Maverick praised Able Lending for offering hybrid loans that incorporate crowdfunding along with traditional loans.
NerdWallet noted that one drawback is that Able doesn’t lend in the states we mentioned earlier – California stings a little bit, as the state is home to three of the top 11 cities for startups, according to Fortune.
Our Conclusions About Able Lending
Able’s hybrid method of raising funds for startups as well as their loans for established businesses and debt is one of the more unique business models we’ve found during our research of small business lenders.
Pros of Able Lending
We’d say the strength of Able Lending is a startup’s ability to get lower interest rates through the use of donations from backers. We also believe that Able Lending’s refinancing rates are very competitive compared to other lenders.
Cons of Able Lending
Entrepreneurs may find Able Lending’s crowdfunding model a little too slow. If you need quick cash, Able probably isn’t the best choice because of that hybrid model. Also, it’s a notable drawback that the company doesn’t lend to businesses in California.
Who Is a Good Fit for Able?
The ideal Able Lending client, in our opinion, is an entrepreneur with good credit who is looking for the lowest rates possible and doesn’t mind soliciting family, friends, colleagues and others for capital.
The Final Word: Able Lending Is an Interesting Choice for the Right Person
Not every small business owner wants to ask their family and friends for help – in most cases, they already have. But for those who are in the early stages of a startup, Able Lending provides a great system of interest and repayment for crowdfunded startups.
Once you’ve passed the initial ask phase, their funding matching and non-backed loans can provide a next-level financing option that can aid in growth.
Don’t forget Able’s refinancing options, either – their rates are some of the best in the business.