Getting small business loans from a bank has become a herculean task for small businesses, particularly after the recession. As most of the traditional lenders are often reluctant to approve a small business loan, there are other companies emerging to rescue small businesses during their times of financial crunch.
Here are the three companies that are turning around the small business loan industry for better.
- SmartBiz – Making SBA Loans Smart – While it is a commonly known fact that the loan process by banks under the US Small Business Administration (SBA) take weeks to approve, SmartBiz has come forward to trim such duration. The San Francisco-based company has made it possible for a small business loan of up to $150,000 to get approved in as little as one week’s time. The company employs an algorithm that could assess the creditworthiness of the applicant through papers submitted online. The pre-approval time is as short as 30 minutes, and the funds can be credited within seven days of application.
- OnDeck (Nasdaq:ondk)- Predictive analytics – OnDeck is a provider of funds for those small businesses, which have been turned down by the traditional lenders for lack of robust credit scoring.OnDeck uses a smart online algorithm to evaluate the credit profile of business through online information such as the web, financial information and social media existence. The parameters for approving the loan is way lenient than the traditional banks as a business with a credit score of just 500 could be eligible for the loan versus the guideline of 660 laid down by the banks.
- Fundbox – Invoice Factoring – While many lenders are wary of lending on the basis of unpaid invoices, Fundbox has finally found a way out of the complexities. Unlike the traditional lenders, Fundbox offers advances against 100% of the invoice value on a non-recourse basis. The company uses a sophisticated underwriting tool to analyse the risk at both the business and individual invoice level. Since the borrower himself/herself pays back the loan, so there is no question of contacting or interacting with a business’ The Annual Percentage Rate (APR) for a Fundbox loan is in between 44% to 64%, which is relatively lower than the traditional small business factors charge of 80% or more.