IOU Financial Review

IOU Financial Review [Small Business Loans 2022]

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IOU Financial Review

IOU Financial is an online lender that was founded in 2008 and has since then funded approximately $500 million small business loans.

This figure isn’t that much when you compare it with similar online lenders who have crossed the billion-dollar mark in funding, whereas IOU financial has remained quite limited in its size and market capitalization for several reasons.

IOU is expensive and the eligibility criteria are quite stringent. In addition to this, they go out of the way to secure their end, which means that the terms and conditions offered by IOU are some of the toughest in the market. 

Onto our IOU Financial review! 

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Services Offered

  • Short term loans

Eligibility Criteria

  • Time In Business. 1 year.
  • Business Revenue. $100,000 per year and $3,000 average daily balance over 3 months.
  • Personal Credit Score. 600.
  • Bank deposits. 10 or more.

Applicants that meet the minimum criteria must also be willing to sign almost 80% of the total ownership in a personal guarantee for the loan. This means that if the business defaults and is not able to repay, the guarantors will be held personally liable because they signed the personal guarantee. The personal guarantee has to be signed by the actual owners of the business, so if the business is owned by a single owner they are held personally liable. If there are more than 4 owners, then at least 80% of the owners must sign the personal guarantee.

RELATED: American Express Business Loans.

IOU Financial Loans

IOU Financial Rates & Terms

  • Borrowing Limits. $10,000 – $500,000.
  • Term Length. 6 months, 9 months, 12 months, 15 months or 18 months (minimum $80,000 for 18 months).
  • Borrowing Fee. 15% – 31% of the borrowing amount.
  • Origination Fee. 7.8% – 8.8% of the borrowing amount.
  • Administration Fee. $595.
  • Collateral. Personal guarantee.
  • Additional Convenience Fee. Optional.

The best thing about IOU financial is that it is big on transparency, and most of the information about their short term loans is easily accessible on their website. The short term loans offered by IOU are a combination of both fixed flat fees and interest rates. Borrowers can save on interest payments by paying early, however, the fixed fee still has to be paid, which is one of the reasons why IOU is on the expensive end of the lending spectrum. 

Applicants can utilize the loan calculator on their website to get a rough idea of the terms and rates they may receive if they apply for a short term loan. One major drawback of IOU is that it requires daily repayments via ACH transfer for loans that are under $70,000. Loans above $70,000 receive weekly payment terms, so this is something that the borrowers need to be vary of. Daily payments can only be managed by businesses with extremely solid financial fundamentals and highly efficient working capital management. 

The origination fee is also quite high compared to other lenders, and unlike other lenders, the origination fee is not included in the borrowed amount; instead, it is spread over the repayment schedule. So, for instance, some other lender may charge a 2% fee on $10,000 and deposit $9,800 into the borrower’s account. IOU, on the other hand, will transfer the full amount of the loan and charge the origination fee in the repayments. 

A refinance facility is also available, but to refinance, the borrower must pay back 40% on the existing loan. The schedule of post-service fees is available in the FAQ section of the official site. 

This is where IOU comes across as more transparent than other lenders, as most borrowers won’t know what the charges will be until they initiate the process of application. IOU, however, has the charges clearly displayed on their website.

IOU Financial Logo

Application Process

The IOU Financial application process is fast and convenient. The website claims that their application procedure only takes 3 minutes to complete, after which the applicant will be pre-approved within a few seconds, and the funds transferred within 24 to 48 hours if everything is in order. However, most applications take longer as applicants require more time to gather all the required documentation. To speed up the process, applicants should have the following list of documents at hand before applying:  

  • For loan terms up to 12 months: Bank statements for the last three months
  • For loan terms up to 18 months: Bank statements for the last six months along with tax returns. 
  • Void cheques
  • Drivers license for personal identification

The application can be filled either online or with the help of a representative over the phone. IOU will carry out a soft credit check on the applicant using the given information.

RELATED: National Business Capital Review.

IOU Finacial Customer Service

IOU can be contacted through:

  • Phone
  • Email
  • Online chat on the website

However, there have been complaints by users that they have been left hanging by the representatives at times, or they have been referred to numbers that don’t answer. Some complaints also indicate that the representatives do not appear to have complete knowledge about the products and services offered.

IOU Financial Reviews

IOU Financial Reviews & Complaints

The online reviews for IOU are highly diverse. People have either had a very good experience or a very bad experience. Most of the complaints are saying that the fast application time is a false claim, instead, the application process can take up to a week. People have also complained that the service is extremely expensive, which is certainly true and IOU doesn’t try to hide this fact either. 

Whereas customers with a good experience state the service was very fast, and that the representatives are professionals and understand the problems clients may face. This, therefore, is a highly polarized scenario. The ratings of IOU on sites like Better Business Bureau and Trust Pilot can be said to be good. 

RELATED: Looking For A No Credit Check Business Line Of Credit?

IOU Financial Pros and Cons

We look at the IOU Financial pros and cons below.


  • Transparent when it comes to terms and rates
  • Rapid application process


  • High eligibility criteria
  • Expensive rates

IOU Financial Review: Final Verdict

IOU Financial has positioned itself inside a niche section of the online lending industry and caters to businesses with stable financials. For some businesses, the terms offered by IOU may appear predatory by requiring almost 80% in a personal guarantee.

The high eligibility criteria of IOU means that most of the applicants who meet IOU’s criteria will also qualify for funds from most of the other lenders in the industry.

So, it is always a good idea to carry out personal due diligence first and look for options that may be a better fit than IOU, as its high rates and daily or weekly repayments with late fees applicable to missed payments can create difficulties for businesses lacking very strong financial fundamentals.

Up to $500,000 to grow your business with IOU Financial

Find out if you qualify


Thanks for reading our IOU Financial review.

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