In a Nutshell: Small businesses that need access to working capital, or that are looking to expand, used to be able to rely on their local banks for loans — but that’s changing. Fewer banks are serving the small business community, leaving a gap in this important part of our economy. Lendio is a small business loan marketplace that allows business owners to fill out a single application and get loan offers from a pool of 75 trusted lenders on the platform. Lendio uses a smart matching algorithm to place borrowers with lenders, and a dedicated funding manager helps guide the business owner through the lending process.
When Chantel Galloway decided to make her custom wedding gown design business a full-time job in 2016, she and husband Tyler knew they were taking a big risk.
The gowns they designed together were unique and unconventional and created for a modern bride’s unforgettable day. Using silks and other fabrics sourced from around the world, each one-of-a-kind dress is handmade in their Salt Lake City design studio.
The couple knew they would need financing to grow the new venture they’d named Chantel Lauren, but, like many new business owners, they didn’t quite know where to turn. A traditional bank loan would be hard to qualify for given their short track record and less than perfect credit scores. Fortunately, the couple came across Lendio, and soon had a loan offer with terms they could manage.
Lendio is a small business loan marketplace that matches borrowers with potential lenders, based upon certain underwriting criteria. Chantel Lauren soon had its financing, and to say the company has been a success would be a wild understatement.
After being featured in magazines and even appearing at New York’s Fashion Week, orders for gowns began rolling in from brides around the world. The young entrepreneurs were now faced with a new problem: how to meet the growing demand their success had created. Founder and CEO of Lendio, Brock Blake, picks up the story here.
“We got Chantel the initial startup capital that allowed her to get the business going, and it did really well,” Blake said. “She paid that loan back, and we helped her to get a larger loan with better rates. She has done extremely well with her business and has been featured as one of the top bridal gown businesses in the US.”
Small business loans used to be the exclusive purview of local and community banks. However, banking has changed in recent years, and many larger financial institutions no longer make these loans a priority. Alternative lending platforms, like Lendio, are helping to fill this gap by matching business owners and entrepreneurs with lenders who are eager to offer this type of loan for business startups — even if they have poor credit and little collateral.
Up to 75 Trusted Lenders Means More Choices for SMBs
As a marketplace for small business loans, Lendio works with 75 lending partners to ensure a borrower has as many options as possible. This also ensures a wide range of business types and credit profiles can access the funding they need.
“A lot of times new businesses aren’t yet bankable — they haven’t been in business for three years and don’t have a track record,” Blake said. “There are a lot of lenders these days that are looking for ways to provide capital to a business owner who may not have the perfect profile.”
The process starts with a borrower filling out a single loan application on Lendio’s website. Then, using a proprietary matching algorithm, Lendio submits the application to the lenders in the company’s network that are the best fit. Lenders then make offers, and the borrower can choose the one that makes the most sense for their business.
The convenience of filling out a single application that’s then submitted to multiple lenders cannot be overstated. Any business owner will tell you they are far too busy running their operations to spend time filling out multiple loan apps. Lendio’s convenient online application takes only 15 minutes or so, and the step-by-step process is very easy to follow.
Once a business owner has accepted a loan offer and been approved, the funding process can happen in as little as 24 hours. To date, Lendio has funded close to $750 million and has helped between 15,000 and 20,000 businesses find loans.
How the Three C’s Impact Your Lending Options
The evolving lending landscape means the requirements for gaining access to funding have also changed. There was a time when banks required a business owner to show positive cash flow, a good credit score, and collateral — what Blake refers to as the three C’s.
“Back in the day, most lenders required that you had all three,” Blake said. “Now, though, you can get a loan with two of the three, and sometimes even just one of the three. So, if you have bad credit, that can be OK usually. It just means you have to have decent cash flow and/or decent collateral.”
Small business loans come in a lot of different types, from working capital loans to lines of credit and term loans. Lendio can also help businesses get equipment loans and a business credit card.
“We have a lot of lenders that do all different types of loans. We even have lenders that will do loans for subprime or lower,” Blake said.
For business owners who are worried about the impact on their credit score while applying for multiple loans, Blake told us this is rarely a problem.
“Lendio does a soft pull, and we know the credit requirements of each of our lenders so we can confirm the borrower meets the credit requirements when we send over the application,” Blake said. “We’ve done enough business with most of our lenders that they’ll work with just the soft pull until the borrower chooses to move forward.”
Lendio Funding Managers Lend a Helping Hand
Understanding how to navigate the loan process, and even deciding which loan offer to accept, can be a daunting task for a business owner. With all the convenience of an online platform and a single loan application, some may want to know about customer service. Well, the team at Lendio has made that a priority.
“We assign a funding manager to every business owner who comes through our process,” Brock said. “This ensures there’s someone there who can answer your questions and can help you determine the difference between Lender A and Lender B and help provide a better experience when traversing the lending landscape.”
The funding managers at Lendio are experts at explaining everything from the different loan options, rates, and terms, to the overall process of obtaining a business loan. They answer any questions a business owner might have, provide support when needed, and generally help the borrower through the complexities of a small business loan.
Small businesses make up the vast majority of all the businesses in the US. Whether we’re talking about the number of people they employ, their contributions to economic growth, or the innovation that comes from these vital businesses, they are truly the life blood of the nation.
Alternative lending platforms, like Lendio, ensure small businesses can continue to grow, thrive, and innovate. If there’s any question about that, just ask the entrepreneurs at Chantel Lauren — if you can pry them away from their busy wedding gown business for long enough.