Lender
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IOU Financial Review

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About Lender

IOU Financial Inc., headquartered in Montreal, Canada, stands as a trusted alternative in the world of small business financing. Since its establishment in 2009, the company has played a pivotal role in fueling the growth of numerous small businesses, having funded over US$1.5 billion in loans. With a North American operations center strategically located in Atlanta, Georgia, IOU Financial operates as a progressive partner for both brokers and small businesses, offering a reliable lending platform designed to cater specifically to owner-operated businesses with daily sales.

Distinguished from merchant cash advance companies, IOU Financial provides true business loans with fixed terms and payments. The company's lending platform accepts applications from a diverse range of businesses, including cafes, restaurants, retail stores, medical offices, franchisees, and more.

IOU Financial

Key Features

  1. Fast and Flexible Funding. IOU Financial offers swift access to working capital, providing funding within 24 hours of approval. The online application process takes only minutes, allowing small businesses to secure the capital they need promptly.

  2. Flexible Loan Amounts. Loan amounts ranging from $15,000 to $1.5 million cater to a diverse spectrum of business financing needs.

  3. No Upfront Payment of Origination Fees. IOU Financial charges an origination fee, which is a percentage of the loan amount, but it does not need to be paid upfront. Origination fees are added to the loan amount, providing businesses with flexibility in managing their upfront financial commitments.

  4. Fixed Interest Loans. IOU Financial offers fixed interest loans, ensuring predictability in repayment amounts throughout the loan term. The consistent payment structure aids businesses in planning their finances effectively.

Pros and Cons

Pros

Trustworthy Partnership. With a focus on building trust, IOU Financial establishes strong and reliable partnerships with small businesses. Thousands of small businesses already rely on IOU Financial for their financing needs, attesting to the company's credibility.

Consistent Repayment Options. Businesses benefit from consistent repayment schedules, with fixed daily, weekly, or biweekly payment options. This allows entrepreneurs to maintain focus on their operations without worrying about fluctuating payment structures.

Responsible Lending Practices. IOU Financial employs credit expertise and proprietary technology to ensure responsible lending. The company prioritizes the client's cash flow, working towards their profitable growth without unduly stressing their financial resources.

Cons

Limited Geographic Reach. While IOU Financial operates in both Canada and the United States, its services may not be available in all regions, limiting accessibility for some businesses. The terms offered may also be restricted by the local law practices.

Potential for Overborrowing. With loan amounts ranging up to $1.5 million, there's a risk that businesses may borrow more than they need, potentially leading to unnecessary debt burdens.

Origination Fees. While IOU Financial does not require upfront payment of origination fees, borrowers should be aware that these fees are added to the loan amount, potentially increasing the overall cost of borrowing.

Reliability

IOU Financial demonstrates a strong track record of reliability and customer satisfaction, the evidence being its accreditation by the Better Business Bureau (BBB) and its impressive rating of 4.8 out of 5 stars. With a significant number of positive reviews totaling 795 on Trustpilot, the company has garnered trust and confidence among its clientele. These indicators underscore IOU Financial's commitment to providing dependable and trustworthy financing solutions to small businesses, further solidifying its reputation as a reliable partner in the lending industry.

How to Apply for an IOU Financial Loan?

  1. Visit the IOU Financial Website. Navigate to the official IOU Financial website to begin the application process. The website provides detailed information about the company's services, loan products, and eligibility criteria.

  2. Complete the Online Application. Fill out the online application form, which typically takes only a few minutes to complete. You'll be asked to provide basic information about your business, including its name, industry, revenue, and length of operation.

  3. Provide Documentation. IOU Financial may require supporting documentation to verify the information provided in your application. This may include bank statements, financial statements, tax returns, and other relevant documents. Be prepared to submit these documents electronically for review.

  4. Wait for Pre-Approval. Once you've submitted your application and supporting documents, IOU Financial will review your information and provide pre-approval within seconds. This pre-approval indicates the maximum loan amount you qualify for based on your business's financial profile.

  5. Review Loan Terms. After receiving pre-approval, you'll have the opportunity to review the loan terms offered by IOU Financial. This includes details such as the loan amount, interest rate, repayment schedule, and any applicable fees.

  6. Accept the Offer. If you're satisfied with the loan terms, you can accept the offer provided by IOU Financial. By accepting the offer, you agree to the terms and conditions outlined in the loan agreement.

  7. Receive Funding. Upon acceptance of the loan offer, IOU Financial will finalize the loan agreement and initiate the funding process. Funding is typically disbursed within 24 hours of acceptance, providing your business with the working capital it needs to thrive.

Conditions and Requirements

Conditions

  1. Loan Amounts. IOU Financial offers loan amounts ranging from $15,000 to $1.5 million, providing borrowers with the flexibility to access the capital they need.

  2. Loan Terms. Borrowers can choose loan terms ranging from 6 to 36 months, allowing for customized repayment schedules that suit their business needs.

  3. Repayment Options. IOU Financial provides various repayment options, including daily, weekly, bi-weekly, or monthly payments. Borrowers can select the payment frequency that aligns best with their cash flow.

  4. Origination Fees. While IOU Financial charges origination fees, these fees do not need to be paid upfront. Instead, they are added to the loan amount, providing borrowers with flexibility in managing their upfront financial commitments.

  5. Fixed Interest Rates. The lender offers fixed interest loans, ensuring predictability in repayment amounts throughout the loan term. Borrowers can budget effectively without worrying about fluctuating interest rates.

Requirements

  1. Total Business Ownership. Borrowers must have at least 80% ownership of the business for which they are seeking financing.

  2. Business Establishment. The business must have been established and operational for a minimum of one year.

  3. Bank Account Activity. Borrowers should demonstrate a consistent history of bank account activity, typically requiring a minimum of eight or more deposits per month.

  4. Annual Revenue. The business must have a minimum annual revenue of $120,000 or more to qualify for IOU Financial's financing solutions.

Ways to Receive the Money

  1. Direct Deposit into Business Bank Account. Once a borrower's loan application is approved and the terms are accepted, IOU Financial typically initiates a direct deposit into the borrower's business bank account. This method ensures that the funds are swiftly transferred to the designated account, providing immediate access to the capital.

  2. ACH Transfer. Another common method for receiving IOU Financial funds is Automated Clearing House (ACH) transfer. ACH transfers allow for electronic funds transfer between bank accounts and are commonly used for loan disbursements. Borrowers can expect the funds to be deposited directly into their business bank account via ACH transfer.

Products

Small Business Loans from IOU Financial provide businesses with access to a lump sum of capital, which can be used for various purposes such as expansion, inventory purchase, equipment upgrades, or working capital needs. With flexible repayment terms ranging from 6 to 36 months, businesses can choose a repayment schedule that aligns with their cash flow.

Reasons for Getting Rejected for an IOU Financial Loan

  1. Insufficient Revenue. IOU Financial typically requires businesses to have a minimum annual revenue of $120,000 or more to qualify for financing. If a business's revenue falls below this threshold, it may not meet the eligibility criteria for a loan.

  2. Limited Time in Business. IOU Financial typically requires businesses to have been operational for at least one year to qualify for financing. Startups or businesses with a limited operating history may be deemed too risky for lending.

  3. Low Credit Score. While IOU Financial considers factors beyond just credit scores in its lending decisions, a low credit score can still negatively impact an applicant's chances of approval. Businesses with poor credit histories may be seen as higher-risk borrowers and could face rejection.

  4. Inadequate Cash Flow. IOU Financial evaluates a business's cash flow to assess its ability to repay the loan. If a business has inconsistent or insufficient cash flow to support loan payments, it may be deemed ineligible for financing.

  5. Failure to Meet Eligibility Requirements. Businesses must meet specific eligibility criteria set by IOU Financial, including ownership percentage, bank account activity, and other financial metrics. Failure to meet these requirements could result in rejection.

  6. Outstanding Debts or Liens. Businesses with existing debts or liens may face challenges in obtaining additional financing. IOU Financial may view businesses with significant outstanding obligations as too risky to lend to.

How to Repay an IOU Financial Loan?

  1. Understand Repayment Terms. Before accepting a loan offer from IOU Financial, borrowers should carefully review the repayment terms outlined in the loan agreement. This includes details such as the loan amount, interest rate, repayment schedule, and frequency of payments.

  2. Set Up Automatic Payments. IOU Financial offers the option to set up automatic payments for loan repayments. Borrowers can authorize the lender to withdraw funds directly from their business bank account on the specified payment dates, ensuring timely and hassle-free repayment.

  3. Choose Payment Frequency. IOU Financial provides flexibility in choosing the frequency of loan payments. Borrowers can opt for daily, weekly, bi-weekly, or monthly payments, depending on their cash flow and preference. It's essential to select a payment frequency that aligns with the business's financial needs and budget.

  4. Monitor Repayment Schedule. Borrowers should monitor their repayment schedule closely to ensure that payments are made on time and in full. IOU Financial provides access to an online account portal where borrowers can view their loan details, including payment history and upcoming due dates.

  5. Communicate with IOU Financial. If borrowers encounter any difficulties or challenges with loan repayment, it's essential to communicate promptly with IOU Financial. The lender may be able to offer assistance or explore alternative repayment options to help borrowers stay on track with their payments.

  6. Complete Repayment. Once the loan term is complete and all scheduled payments have been made, borrowers will have successfully repaid their IOU Financial loan in full. Borrowers should review their loan agreement and confirm that all obligations have been met before considering the loan fully repaid.

Alternatives

SharpShooter

SharpShooter is a standout in the lending industry, offering notably low starting interest rates and unique eligibility criteria that cater to startups. Unlike many lenders, SharpShooter provides certain loans to businesses that have been operating for just 100 days, provided they meet specific requirements such as averaging at least $10,000 in monthly deposits or accepting credit or debit card transactions. While longer-term loans typically entail stricter criteria and higher interest rates, SharpShooter's offerings provide an appealing option for businesses seeking quick cash with accelerated repayment terms.

OnDeck

OnDeck, an online lender, provides accessible financing options with moderate interest rates ranging from 8% to 29%. With eligibility criteria requiring businesses to have been operational for at least one year, generate an annual revenue of $100,000 or more, and maintain a personal credit score of 550 or higher, OnDeck aims to support a wide range of businesses. Offering loan amounts of up to $300,000 for terms of up to 18 months, OnDeck provides flexible repayment terms, allowing borrowers to choose between daily or weekly payments to suit their cash flow needs.

Merchant Growth

Merchant Growth, an online lender specializing in serving businesses across diverse industries, including e-commerce, restaurants, automotive, retail, salons and spas, and manufacturing, offers a variety of financing solutions tailored to meet business needs. With quick access to funds within 24 hours, Merchant Growth provides e-commerce financing, merchant cash advances, flexible repayment plans, and fixed loans akin to traditional business loans, providing businesses with the flexibility and support they need to thrive.

Driven

Driven, formerly known as Thinking Capital, stands as one of Canada's leading alternative lenders of small business loans, having supported over 17,000 businesses across the country since its inception in 2006. With a streamlined application process that takes less than 10 minutes and offers pre-qualification without impact on credit, Driven provides convenience and accessibility to borrowers. Offering options for daily or weekly payments and loan terms ranging from 2 to 24 months, Driven caters to the diverse needs of Canadian businesses, providing them with the funding necessary for growth and success.

Editorial Opinion

In evaluating IOU Financial's lending practices and services, it's crucial to acknowledge the role it plays in providing accessible financing solutions to small businesses. While the company's streamlined application process and quick funding turnaround are commendable aspects, it's essential also to consider potential drawbacks such as eligibility requirements and repayment terms. While some businesses may find IOU Financial's offerings well-suited to their needs, others may encounter challenges or prefer alternative financing options such as traditional banks.

Important

Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Verify that the lender is registered with the appropriate regulatory authorities in Canada, such as the Financial Consumer Agency of Canada (FCAC), or is licensed to operate in your province.
  2. Check if the lender is a member of reputable industry associations in Canada, such as the Canadian Bankers Association (CBA) or the Canadian Lenders Association (CLA).
  3. Thoroughly review all terms and conditions outlined in your loan agreement. Understand the repayment schedule, interest rates, fees, and any penalties for late payments or defaults.
  4. Ensure that the contract clearly states the annual percentage rate (APR) and the total cost of borrowing, including any administrative fees or additional charges.
  5. Familiarize yourself with your rights regarding loan cancellation or early repayment. Canadian consumers have the right to cancel a loan within two business days after signing the agreement, without penalty.
  6. Research the lender's reputation by checking customer reviews, complaints, and feedback on reputable online platforms, as well as through resources provided by organizations like the Better Business Bureau (BBB).

Methodology

At Finanso, we've carried out a comprehensive analysis of over 70 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

Additional Resources

Sources

FAQ

How much can you borrow from IOU Financial?

IOU Financial offers flexible loan amounts ranging from $15,000 to $1.5 million, providing businesses with access to varying levels of capital to support their growth and operational needs. Whether a business requires a small infusion of funds or a larger investment, IOU Financial aims to accommodate a wide range of financing requirements with its diverse loan options.

Does IOU Financial approve everyone?

While IOU Financial aims to provide accessible financing solutions to small businesses, approval is not guaranteed for every applicant. The company evaluates each application based on factors such as the business's revenue, time in operation, creditworthiness, and other eligibility criteria.

Meeting the requirements outlined by IOU Financial increases the likelihood of approval, but final decisions are made based on a thorough assessment of the applicant's financial profile and business viability.

Is IOU Financial a legitimate company?

Yes, IOU Financial is a legitimate company that has been operating since 2009, offering financing solutions to small businesses in Canada and the United States.

The company is accredited by the Better Business Bureau (BBB) and maintains a positive reputation within the lending industry. IOU Financial adheres to regulatory standards and industry best practices, providing transparent and reliable services to its clientele.

Is IOU Financial a good lender?

Whether IOU Financial is considered a good lender depends on individual business needs and preferences. The company has garnered positive reviews from satisfied clients, citing its quick funding turnaround, flexible repayment options, and attentive customer service.

However, as with any lender, it's essential for borrowers to carefully review the terms and conditions of the loan, assess their financial situation, and ensure that the loan aligns with their business goals and budget.

Company documents

Privacy Policy
Terms of Use

IOU Financial offers working capital to small business owners through strong and trusted partnerships.

© IOU Financial
Financial products
IOU Financial
Small Business Loan
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
$10,000 - $600,000
Rate
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Effective interest rate on the product

set individually
Term
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Loan term for the financial product

6 - 18 months
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