Our Take
Able Lending offers term loans to businesses – ranging from $1,000 to $1M. What makes them different from other lenders is that they’d like for you to raise some portion of that loan amount from your friends, family and fans (backers). They in turn will match and multiple the amount you raise from your backers. Because you’re raising money from your family and friends, the theory goes you’re more likely to pay back a loan. And, because of that, Able offers much lower interest rates than its peers.
For businesses that are up to the challenge of raising a portion of their debt from family and friends, Able is hands down the lowest-cost online lender around.
Products offered
All of Able’s products are term loans: Able Start, Able Growth, and Able Refi. The biggest differences among the products relate to what stage of a business you represent. If you are just starting out and have been in business less than 6 months or have less than $50,000 in revenue, you are eligible for Able Start. Otherwsie, you are eligible for Able Growth.
If you already have taken out a merchant cash advance or other (usurious) loan, you are eligible for the Able Refi product.
The basic way the product works: Able determines how much they are willing to lend to you. It’s mostly based on your cash flow and your revenue. Then, they are willing to lend you this amount, if you are able to raise some portion of it through friends, family or fans. They call these people your ‘backers.’
Borrower Qualifications
You must be a business owner – and in the case of Able Growth or Able Refi, must have been in business longer than 6 months, with $50,000 or more in revenue.
Additionally, there are certain requirements for the ‘backers’ A backer in your loan can’t be people without a valid U.S. bank account; people not legally domiciled in the U.S.; the business entity; anyone with whom we are legally prevented from doing business with; and anyone who we suspect presents a risk of money laundering or other illegal activities.
Fees and Interest Rates
Able’s interest rates are higher than that of SBA loans, competitive with other term loans from banks and credit unions, and lower than those from other alternative lenders. Interestingly, the borrower can set the rates for an Able Start loan (Able doesn’t contribute towards that loan). But in other cases, their rates start at 8% and average around 11% annually.
Origination fees are less than $1,000.
How to Apply
Start by heading over to Able Lending and learning more about their model.
Here’s what their prequalification page looks like. It’s short, and it’s easy to get started.
The negatives
Some view the fundraising process as a negative – we think it’s core to their model, and allows them to charge interest rates below other alternative lenders.
Additionally, backers don’t get their principal back until Able is paid in full. Then, backers get paid back interest and principal. This ‘debt subordination’ reduces Able’s risk, and they pass that along to you in the form of lower interest rates.
The positives
If you are comfortable with the fundraising process, Able Growth and Able Refi represents a very cheap form of financing – and rivals that of a traditional line of credit or loan from a bank.
Additionally, Able Start provides needed ‘structure’ to the process of hitting up your friends and family for a loan.
Our conclusions
We think Able is a good option if any of the below is true:
- You’ve been in business for less than a year
- You have a following of friends, family and fans that are interested in helping you succeed
- You are willing to trade off some speed for a lower rate (fundraising takes time)
We think this is the most cost-competitive loan around for a small, growing business. And, if you don’t need the money tomorrow, you can get a rate that is 1⁄5 the amount of what a Merchant Cash Advance company might charge (10% versus 50% APR). Consider Able Lending.