Able Lending brings small-business loans into the social media age, helping borrowers recruit their friends and relatives online and giving them a secure platform on which to contribute.
Able may be right for your business if you:
Have a broad network of family and friends willing to fund your business: The lender provides a way to recruit backers for your loan and pay them back.
Have good personal credit and an established business: To qualify for financing, you have to have a personal credit score of at least 600 and your business must have been in operation a year or more with at least $100,000 in revenue.
Plan to refinance debt: Able’s annual percentage rates range from 8% to 25%, with some flexibility to bring rates lower, depending on the level of friends-and-family funding.
In this article
Reasons to use Able Lending
Ease of bringing on and paying back friends and family
Able’s main product is called the Able Growth loan, in which the funding is provided by the lender and the backers the borrower recruits. Able makes it easy to recruit backers by setting up an online pledge page similar to those on crowdfunding sites. Backers contribute at minimum 10% of the loan amount, though they typically pour in up to 25%. After the loan is funded, you make one payment a month, which Able distributes.
For the Able Growth loans and for a more conventional, 100% Able-funded loan, amounts range from $25,000 to $1 million with one- to five-year terms and APRs ranging from 8% to 25%. Borrowers typically use their loans to stock up on inventory, refinance pricier debt, invest in new equipment or expand their businesses.
Read our step-by-step guide on the lender’s application process.
More backers means lower rates and longer terms
When Able conditionally approves your Growth loan, it presents you with loan scenarios that vary with the number of backers involved, how much they contribute and the rate they will receive. In general, the more backer funds you raise, the more wiggle room Able has to offer you a lower overall rate for the loan. Growth loan APRs range from 8% to 25%, which is competitive among online lenders. The rates include a 5% origination fee. The company says Growth loan borrowers receive an APR of 12.65% on average.
Also, with a higher proportion of backer funding, Able can offer longer terms, which lower your monthly payments. (Able’s dynamic proposal tool helps borrowers understand how the variables affect monthly payments.) The company says its flexibility on backer-funded loans makes it particularly attractive to borrowers trying to refinance pricier debt.
No prepayment fees
Able doesn’t charge prepayment penalties. So paying off the loan balance early eliminates a liability from your balance sheet and saves you on interest.
Where Able Lending falls short
Not currently lending in six states
Able currently lends in 44 states and the District of Columbia. You should seek other lenders if your business is based in California, Delaware, Nevada, North Dakota, South Dakota or Vermont.
Not for borrowers with bad credit or brand new, pre-revenue businesses:
Businesses applying for the Growth or Able-funded loans must have operated for at least one year, have positive year-over-year revenue growth and have at least $100,000 in annual revenue. Borrowers must have a personal credit score of at least 600 and sign a personal guarantee. In addition, you must be bankruptcy-free in the 12 months prior to funding.
Unpredictability and variability in backer funding
For Growth loans, Able doesn’t provide funding to borrowers until all backers have paid their contributions. If there are laggards, it’s up to you to make sure they fulfill their pledges. In general, Able gives borrowers two weeks to get all their backers in line, though it can be extended to a month.
If anyone backs out, Able can fund the loan at a higher proportion, but the friends-and-family portion cannot fall below 10% of the total amount of the Growth loans.
If you have less than a year in business
Able offers Friends and Family loans, which are entirely backer-funded and aimed at brand-new businesses that stand little or no chance of securing financing from a traditional bank or even other online lenders.
Able puts none of its own money into the loans, but charges an origination fee of 3% of the loan amount for administering them. Able streamlines the legal and administrative aspects of enlisting friends and family, then handles the payback process. In doing so, the company helps protect your relationships, says Mihir Korke, Able’s chief marketing officer.
Funding amounts for Friends and Family loans range from $1,000 to $1 million, with terms (such as rates and payment schedules) agreed upon by the borrower and backers. APRs start as low as 3%.
Compare Able Lending to other lenders
If you want to compare Able Lending with other lenders, use NerdWallet’s small-business loan tool. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Updated July 28, 2017.