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Accion Review: Best Alternative Lender for Startup Loans

We recommend Accion as the best alternative lender for startup loans. We chose Accion from dozens of alternative lenders. To understand how we selected our best picks, you can find our methodology and a comprehensive list of alternative lenders on our best picks page.

Accion is one of only a few alternative lenders to offer affordable loans to startup businesses, and its customer service was among the best we found. Here is a breakdown of why it's our best pick.

Whereas most alternative lenders don't work with startup businesses, Accion, a nonprofit microlender, has a loan program specifically for businesses that have been open for less than six months. Most of the other lenders we analyzed required businesses to be open for at least a year to even be considered for a loan.

Because startups don't have an established track record for lenders to evaluate, Accion assesses both business finances and personal finances. The company considers the business's cash flow, as well as personal income from your job, if you have one, when determining whether to approve you for a loan. The lender needs to see proof that one of those two streams will allow you to repay the borrowed money.

Editor's Note: Trying to find the business loan that's right for you? Fill in the questionnaire below and you will be contacted by our partner alternative lenders who will help you find the right loan for you.  

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Accion is unique in that it evaluates businesses differently based on their geographic location. Each state has a different set of minimum requirements for applicants to be considered for a startup loan. Some of the more common requirements include the following:

  • A minimum credit score of 575
  • Sufficient cash flow to support monthly loan payments
  • No bankruptcies in the past 12 months or foreclosures in the past 24 months
  • No late payments on your rent or mortgage in the past 12 months
  • Proof of income
  • Be current on all of your business and personal bills
  • A business plan that includes a budget and cash-flow projections
  • Collateral — such as real estate, a vehicle or business assets — for the loan

It's important to remember that these are only minimum requirements. Each business and owner has a different financial makeup, so it's impossible for us to say exactly which businesses will qualify.

Because startup loans are riskier than those for established businesses, there is an extensive application and approval process. You start by filling out an online application, which asks a variety of questions about you and your business, including the following:

  • Whether you own or rent your residence, and how long you've lived there
  • What types of bank accounts you hold for your business
  • How many years of education you have
  • How long your business has been open and earning revenue
  • How long your business has been in its current location
  • Your business's legal structure
  • Total monthly personal income and expenses
  • Total monthly business revenue and expenses
  • Total liabilities
  • Total value of the business and personal assets you'll use as collateral
  • What you will use the money for
Accion has a fairly extensive online application that asks a variety of questions about yourself and your business. It takes roughly 15 minutes to complete. After you are finished, a loan officer will contact you to walk you through the rest of the process.

An Accion loan officer reviews the application to determine if you're a good loan candidate. If given initial approval, you'll then need to provide proof of the information submitted in your application, such as revenue, your business plan and cash-flow projections.

The loan officers review all of these documents to make a final determination on whether to approve you for a loan and, if so, for how much. Those who aren't approved are given specific reasons why, along with advice on what they can do to improve their chances in the future. Most of the lenders we examined didn't provide this type of advice to applicants. Typically, you're eligible to reapply with Accion in three to six months.

In all, the loan application and approval process takes an average of about one month. Although this is much longer than many other alternative lenders' processes, it is still shorter than the traditional bank loan process.

In addition to the minimum requirements, Accion loans carry different terms based on location. Each state has a different maximum startup loan amount, ranging from $10,000 to $100,000. Arizona, Colorado, Nevada, New Mexico and Texas have a $100,000 limit, while Illinois and Indiana have a $20,000 limit. Every other state has a $10,000 limit.

Although these amounts vary greatly, all are more than the amount that many of the other alternative lenders we examined offered to startup businesses. Most of the other lenders we looked into that work with new businesses were offering loans of just a few thousand dollars.  

There is a lot of flexibility in possible uses for Accion startup loans. While the lender does want to know what you will use the money for before approving you, there are no set restrictions on what those uses can be. The loans can be used to purchase inventory, buy or lease equipment, hire employees, pay for professional expenses, or finance any other startup costs.

Although the interest rates may vary, most of Accion's startup loans have annual percentage rates (APR) that start at 10.99 percent. This is significantly lower than the APRs on loans from many of the other lenders we considered, which had starting rates between 20 and 30 percent. 

In addition to the interest rate, there are a few other fees that may apply, depending on the state in which you live. These fees include those for application, closing, commitment and collateral filing. One big difference between Accion and other lenders is that with this loan, you also need to put up collateral, which is typically real estate, a vehicle or other business assets.

Loans are repaid on a monthly basis over the length of the loan, which can range from six months to 10 years depending on where you live. To help ensure that you pay on time, Accion gives you the option of having the money automatically debited from your account.

We were incredibly impressed with the level of customer service we received from Accion. To test the level of support, we called the company several times, posing as a business owner interested in a startup loan. Each time, our call was answered immediately by a representative ready to answer our questions. Many of the other lenders we investigated attempted to get us to fill out an application before ever hearing our concerns. But the Accion representatives were much more attentive to our needs; they listened to our questions and answered them thoroughly.

During our initial call, we discussed a variety of topics, including available loan amounts, the minimum requirements to be considered for a loan, the type of collateral needed, how the application process works, how long it takes to be approved and how you pay back the loan.

In subsequent calls, we received the same high level of attention we got during our first discussion. The representatives were friendly and extremely helpful, and by the end of our calls, we had a very clear understanding of Accion's startup loans.

It was obvious from our calls that Accion places a big emphasis on helping small businesses. It was refreshing to speak with a lender that seemed more interested in our well-being than in how much money they could make off of us.

We were also pleased with the amount of detailed and helpful information on Accion's website. You can select the state you live in to see the exact loan types and terms available in your area. In addition, there is a comprehensive FAQ section, as well as a library of tips, articles and videos to help you grow your business.

 

Accion has an entire resources section devoted to helping small business grow and succeed. The section includes a variety of tips, articles and videos.

Accion representatives are available by phone or email Monday through Friday from 7 a.m. to 7 p.m. Central Time.

Accion's biggest downside is that the application-and-approval process is significantly more detailed than those of many other alternative lenders. The application is more comprehensive, borrowers need to provide more physical documents and the length of the entire process is much longer. While it typically takes at least a month to get your loan with Accion, many other lenders we investigated provided funds in less than five days. The collateral required for Accion's loans could also be a problem for some businesses.

If you want a simpler and faster application process, we would encourage you to consider our second-place winner in this category, CAN Capital. This lender provides loans to businesses that have been open for at least four months, doesn't require any collateral, has as an easy online application and makes funds available in as few as two days. However, to qualify, your business must have monthly gross revenue of at least $4,500. In addition, with CAN Capital, you must be prepared for higher interest rates and smaller loan amounts.

Another potential negative of Accion is that its startup loan programs differ by state, which could be confusing and frustrating for businesses that could qualify for loans in some states but not the state in which they are located. Another downside is the added fees that Accion charges. Although most lenders had an origination fee, they didn't charge borrowers just for filling out an application, as Accion does.

In addition, Accion isn't accredited by the Better Business Bureau. Most of the other lenders we examined were. However, although it was not accredited, there were no records of complaints about Accion on the Better Business Bureau website.

Ready to choose an alternative lender? Here's a breakdown of our complete coverage:

Editor's Note: Trying to find the business loan that's right for you? Fill in the questionnaire below and you will be contacted by our partner alternative lenders who will help you find the right loan for you.  

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Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.