In the wake of the Financial Crisis, big banks were forced to tighten their lending standards, leaving many small business owners out in the dark. A 2014 Harvard study found that bank lending to small businesses plummeted during the Financial Crisis and failed to recover in the years that followed.
Luckily, fintech names have stepped in to fill the void.
There are a number of online lenders out there other than traditional banks, but OnDeck Capital Inc (NYSE: ONDK), LendingClub Corp (NYSE: LC) and Credibly all offer unique products and services that specifically cater to small businesses.
OnDeck’s unique business lending technology allows for borrowers to receive a loan decision in a matter of minutes and receive their funds in as little as one business day. Instead of ruling out potential borrowers due to flawed personal credit histories, O Deck focuses instead on the health of the borrower’s business. If you have less-than-perfect personal credit but are running a successful small business, you are much more likely to get approved for an OnDeck loan than you would be at most banks.
On Lending Club’s platform, eligible small business borrowers can complete the loan application process in under five minutes and receive multiple quotes. Lending Club doesn’t require collateral for loans under $100,000, they don’t need detailed business plans or projections, they don’t need to make personal visits to your business and they don’t require expensive appraisals or title insurance. Lending Club’s loans have a fixed interest rate and the company charges no fees for early pay off.
In addition to small business loans, Lending Club is now providing small business credit lines of up to $300,000 that are free to open and charge no monthly fees.
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Small business owners that have been in business for at least six months and generate at least $10,000 in monthly revenue pre-qualify for a Credibly loan of up to $250,000.
Terms of these loans vary from six months to 24 months depending on the size of your small business. One of the best parts about Credibly is their fees--or lack thereof. As long as you're on time with payments (or choose their automatic deduction option), the only fee you'll pay is the origination fee.
Just when it looked like the small business lending environment couldn't get any darker, the dawn of the fintech revolution has made access to business capital easier than ever. On Deck, Lending Club and Credibly are only three of the countless fintech funding options out there for today’s small business owner.
Disclosure: the author holds no position in the stocks mentioned.
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