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IOU Financial Review: Pros, Cons, & How to Apply

Small businesses that need quick funding and can’t qualify for small business loans from banks often turn to alternative lenders. IOU Financial is a paperless, alternative lender with a low credit score requirement, same-day decisions, and funding within 24 hours of approval.

However, all lenders have their benefits and drawbacks. With IOU, you’ll get higher interest rates and fees than many conventional lenders. In addition, you can’t apply directly to the lender currently. You must work with an independent reseller that partners with the lender to apply for its small business loans.

Whether you’re a small business owner or a loan broker interested in the lender, this review covers what you must know, including the pros and cons and how to apply. Specifically, we’ll answer these questions and more:

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    What is IOU Financial?

    typing, keyboard, financial companies, borrowers, business

    IOU Financial is an online-only lender that provides small business loans. It helps businesses with daily sales access working capital through its partners.

    The lending platform specializes in quick and easy applications with fast funding. Same-day approval (or denial) is possible, and you will receive funding within 24 hours. However, speed and convenience come at a premium with high rates and fees.

    Businesses cannot apply directly to the lender—instead, the platform markets to partners, who can offer their small business loans to their clients.

    The company is active in the US and Canada. Its US office is based out of Kennesaw, GA, and the company is headquartered in Montreal, Canada.

    Its US subsidiary did business under IOU Central from 2008-2015. It changed to the parent company name in 2015, but it’s still listed as IOU Central on legal documents and loan forms.

    The company started lending to small businesses in 2009. Since then, it has originated more than $932 million (CAD 1.2 billion) on over 11,000 loans to SMBs in the US and Canada.

    How does IOU Financial work?

    money, small business loan

    IOU Financial offers short-term small business loans. The company does not publish information on collateral requirements, but the online reviews suggest it provides secured and unsecured loans.

    The available loan features are:

    • Loan amounts: $10k – $1.5 million.
    • Terms: 6 – 36 months.
    • Payment schedule: Daily, weekly, or bi-weekly.
    • Rates: Undisclosed.

    What are the qualifications for IOU Financial?

    list, checklist

    The company tells potential partners that their small business clients should meet the following requirements:

    • Time in business: 1+ years.
    • Annual revenue: $120,000.

    It doesn’t list a minimum personal credit score, but online reviews suggest the range is between 500-600. The lender also requires businesses to have a minimum of eight deposits per month in their business bank account.

    80% of the ownership must sign a personal guarantee. All four must sign if the company has four owners, each with a 25% stake. Only four must sign if a company has five owners, each with a 20% stake.

    For IOU, You Need to Know:

    business, people, meeting

    While the company’s target client base is businesses with daily sales, it is not a merchant cash advance company. Its lending products are true business loans with fixed terms and payments, not cash advances.

    Since the business mainly provides small business loans through its reseller partners, rates can vary significantly. Most reviews suggest the company uses a fixed, simple interest.

    There are some significant fees associated with its loans. It charges an origination fee of anywhere from 7%-9% of the borrowing amount. IOU also charges a guaranty fee to reduce risk and a loan administration fee of $495.

    The IOU Financial FAQ provides a lot of helpful information. IOU provides financing across a range of industries, but its typical clients include:

    • Grocery stores.
    • Medical and dental practices.
    • Retail stores.
    • Restaurants.
    • Hotel franchises.
    • eCommerce.

    How to apply to IOU Financial:

    laptop, office, hand

    You cannot apply directly to the lending platform. The company markets to established resellers to offer its small business loans to its clients.

    If you visit the website, you can complete a referral form that goes to the company’s lender partners. It doesn’t provide loan applications, but it can suggest other lenders.

    For ISOs and loan brokers:

    The company’s advertised referral partner program works as follows:

    • Submit qualified leads to the company.
    • Work with your client directly to close the deal.
    • IOU Client Services facilitates a closing call.
    • Receive your commission after finalizing the deal.

    IOU uses a proprietary platform to analyze client financial data quickly, specifically focusing on daily cash flow. It uses this process to streamline underwriting, which allows for same-day approvals and quick funding.

    Once your clients get approval, the lender uses a wire transfer to send them their money, which can happen within 24 hours.

    IOU, Post Funding:

    clock, money, growth

    Repayment begins after you receive your funds. Payments are processed via an ACH transfer from your business bank account. Payment schedules are either daily, weekly, or biweekly. It doesn’t provide an option for monthly payments.

    Origination fees are added to your loan total when the funds are disbursed. You’ll pay the fee as part of your fixed repayment schedule.

    There are no prepayment fees for paying the loan off early. However, late payments and loan defaults carry heavy penalties.

    What are the advantages of IOU Financial?

    The company offers fast business financing with lower credit score requirements than a bank or credit union. The application is quick and easy, and you get a determination within two hours.

    Loan amounts are high at $1.5 million. The company has an informative website and a good online reputation.

    What are the disadvantages of IOU Financial?

    Interest rates are high, and the company tacks on many fees, making it expensive to borrow money. The lender only provides short-term financing and requires frequent repayments, which can strain your cash flow.

    Small business owners can’t apply directly to the company for financing. It requires working with a reseller that partners with IOU.

    Pros & Cons

    plus, minus, pros, cons


    • Fast funding times – within 24 hours of approval.
    • Simple application with same-day approval.
    • Large borrowing amount.
    • Informative website.
    • Low credit score requirement.
    • No prepayment fees.


    • High interest rates with lots of fees, including an origination fee.
    • Only short-term financing is available.
    • Requires frequent repayment.
    • Businesses cannot directly apply for funding.

    Apply for business funding through United Capital Source today.

    IOU Financial Frequently Asked Questions

    Is IOU Financial legit?

    Yes, IOU Central is a legitimate online lending platform. The Better Business Bureau has accredited the company since 2010, where it has an A+ rating.

    What do IOU Financial reviews typically focus on?

    peer review, review

    The lender has mostly good reviews, although its reputation is better on some platforms than others. It has a 4.8 out of 5 rating on Trustpilot, which is considered excellent. However, it only has an average rating of 3.2 out of 5 on Google reviews.

    The positive reviews primarily discuss the ease of the application process and the speed of funding. Many users discussed how helpful the customer service was and called out their agent by name.

    The negative reviews focus on the costs. Several customers complained about the high rates and fees tacked on during the loan process. Several complained that they were misled about the costs, but in most cases, it’s implied they’re referring to the broker that facilitated the deal.

    What if IOU Financial denies me?

    The lender does not set a minimum credit score requirement but has strict requirements for time in business, annual revenue, and monthly deposits. Issues in your credit history could also trigger a denial.

    If IOU declined your loan application, the denial letter should explain why. You can contact them directly if you need more information. Also, since you can only apply through a reseller, the ISO or loan broker you worked with should be able to provide more details.

    Fortunately, there are plenty of online lenders, and most allow you to apply directly (although you can still use a broker if you prefer in many cases). You shouldn’t have issues finding other lenders that provide business term loans and working capital products.

    Other lenders might offer a more diverse suite of lending products as well. Depending on your needs and financial performance, you might be interested in applying for any of the following small business loans:

    Making Your Decision

    doors, choices, choose

    IOU is best suited for successful small businesses with daily sales and consistent monthly deposits. The lender offers high borrowing amounts, quick approvals, and fast funding times, but the tradeoff is higher interest rates and additional fees. The requisite of working with a reseller to apply for their loan product is also a roadblock for many businesses.

    Companies that prefer to work directly with a lender or lending marketplace must find one that offers direct applications (like UCS). In addition, a business with a high credit score, established history, and high revenue can likely find lower-cost financing options. However, the funding speed makes IOU’s increased costs worth it if you have an urgent financial need.

    Since it requires working with a reseller, you should ensure you trust the loan broker. Some businesses prefer sourcing loans through a broker because they can leverage their industry knowledge, and the broker puts in the legwork to find a better deal. Working with a broker or reseller can be very beneficial when done correctly. However, it would be best to vet anyone you work with to ensure they’re reliable and will work towards your best interests.

    Based on user reviews, costs, available products, and convenience, we rate the lender at 3.75 out of 5. Its loan products are worth considering, but the high fees and requirement of working with a reseller make it less than ideal.

    Disclaimer: The IOU Financial trademark is owned by IOU Financial and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from IOU Financial.

    Apply for business funding through United Capital Source today.

    Why Choose United Capital Source?

    Why businesses choose UCS:

    Quick funding options that won’t affect credit
    Access to 75+ lenders with multiple products to choose from
    Financing up to $5 million in as few as 3 days
    1500+ 5 star reviews from happy clients!

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        At UCS, we understand the value of your time and want to ensure that your application has a great chance of approval. Please take note of the following details before applying:
        • To be eligible, it’s necessary to have a business bank account with a well-established U.S. bank such as Chase, Wells Fargo, Bank of America, Citibank, or other major banks. Unfortunately, online-based bank accounts like PayPal, Chime, CashApp, etc., are not permitted.
        • When describing your current average monthly sales deposits to your business bank account, please provide accurate information. Our approval process is based on your current business performance, and it’s essential to provide accurate details about your current sales in the first question on the application form. We cannot approve applications based on projected revenues after receiving funding.
        We appreciate your understanding and cooperation in ensuring a smooth and successful application process.
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