The dark side of a dream is that it requires funding, which is where peer-to-peer lending (P2P) company Upstart comes in. The good news is that the service it offers is not just for entrepreneurs. Just about anybody who meets the requirements can get a loan, from as small as $1,000 all the way to as much as $50,000. (For more, see Peer-to-Peer Lending Breaks Down Financial Borders.)

What Is Upstart?

Interestingly, what Upstart was is not what it is now. When this Silicon Valley startup opened its virtual doors in 2012, its chief executive officer (CEO), ex-Google executive Dave Girouard, made a model that allowed a person to give up a certain percentage of his or her income for 10 years in exchange for funding. If a young entrepreneur wanted to start a company, a deal could be struck giving backers 3% of the founder’s income for the next 10 years.

But that model quickly changed to a more traditional P2P platform, with terms of three or five years and an annual percentage rate (APR) of 4.89% to 29.99%, probably because of the large commitment the entrepreneur had to make to his or her backers.

Upstart Is Different From Some Others

Where others look at only the traditional measures of worthiness, Upstart goes beyond income and FICO score. This allows the company to lend to people with bright futures who are just graduating from college. Every company knows that building a relationship with Millennials could lead to business that lasts decades and positive word of mouth on social media.

You need a credit score of at least 620 to qualify for a loan, but there is no minimum income requirement and you don’t have to have a college degree. Upstart considers your level of education, credentials, work experience and credit history. In other words, if you’re studying to be a doctor, that might hold more positive weight than if you’re a philosophy major, as one of the factors is “area of study.”

It’s worth noting that even if you qualify, Upstart’s underwriters might see you as so much of a risk that the terms of your loan are unattractive. Who wants a loan with an APR of nearly 30%? You could get that on a credit card. Even if Upstart says yes, make sure to carefully review the loan terms to see if it makes sense for you.

You also don’t have to apply fully to see if you qualify. Using a soft credit pull – one that doesn’t affect your credit score – Upstart can give you an estimate of your rate in about two minutes. If you like what you see, you can complete the application process. If you qualify and accept the terms of the loan, you can have the money the next day (unless you’re seeking an education loan, which requires a three-day waiting period). You simply set up automated monthly payments, and if you choose to pay the loan off early, there’s no penalty.

As with most lenders, Upstart charges an origination fee between 2.8% and 6%, depending on your creditworthiness​. You’re going to find this fee in most P2P platforms, because that’s how the companies make money.

Great Customer Service

It’s not very often that you hear of a Silicon Valley startup offering great customer service, but Upstart consistently receives high marks in this area. Most answers are easy to find in the FAQ section, but you can also email or call and get information fast.

The Bottom Line

Taking on debt is something you should do only after a lot of thought, but if you decide to do it, Upstart is a company that has garnered high praise from customers and reviewers. Of course, get some competitive quotes from other P2P companies, such as Prosper and Lending Club, to compare, but you can feel good about doing business with Upstart. (For more, see The 7 Best Peer-to-Peer Lending Websites and  How to Invest in Peer-to-Peer Lending.)

 

 

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