The Small Business Administration recently released a report that shows it’s still tough for small business to get the financing they need. However, alternate solutions like Lendio are filling the gap. In the last 18 months, this online franchise program with a community face to face element has placed $16 million in loans with over 500 small businesses.
Small Business Trends spoke with Mark Cottle, Executive Vice President of Franchising at Lendio, to find out more.
The company was founded in 2011 as a way to offer small business owners a quicker way to get funded. They have a three-pronged strategy that includes direct marketing, partnerships with companies like American Express and franchises aimed specifically at underserved segments of the small business population.
“This marketplace lending franchise program works to reach Main Street businesses in smaller regions and local communities,” Cottle says. “Lendio franchisees are networking with accountants, attorneys and chambers of commerce in their areas to provide loan options to their small business clients.”
Here’s How It Works for Small Businesses
Small business owners fill out a simple 15-minute application. After that, you get a personal funding manager who walks you through the process and offers. These franchisees connect you with a nationwide network of over 75 lenders that include names like Can Capital and Quick Bridge. These managers are small business owners with well-established relationships in their communities.
Small businesses get multiple offers for everything for equipment financing and business lines of credit to a merchant cash advance. According to Cottle, Lendio works well because it leverages the old and the new.
“This union of online technology and the local community gives business owners the best of both worlds when it comes to financing: the high-tech experience of an online lender and the high-touch experience of a community bank,” he says.
Lendio claims on their website that while banks turn down 80% of their applicants, they find funding for more than 65% of the small business that apply with them.
Here’s What Makes It Different from Other Lending Platforms
According to Cottle, about half of small business owners hesitate to go through with online financial transactions. Lendio franchisees meet face-to-face with these folks and they also create local partnerships with community lending institutions.
That way, a Lendio franchisee is alerted when the bank can’t proceed with the loan for small business.
“This often happens when a business needs less than $100,000 in financing or they haven’t established a thick enough credit profile to fit a bank’s specifications. In turn, Lendio franchise owners refer their clients, who do qualify for bank financing, to local banks,” Cottle says.
Here’s How to Get a Lendio Franchise
Regional franchisees have networks of small business owners in their areas. They attend events to market Lendio’s platform and work with these businesses, according to Cottle.
“Franchisees are usually small business owners in their own right; they have well-established relationships in the community and can leverage their understanding of local economic challenges to help business owners overcome financial hurdles”
Lendio is closing in on the $1 billion mark in loans that have gone through its platform. They have plans to introduce new territories for franchisees.
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This shows that there is money in this market and it is waiting to be exploited.