BusinessLoans handles about 15,000 applicants per month and is able to connect 95% of customers to the resources they need to get a loan, Gonzales said.
Offering multiple loan options to a customer is one aspect of the service, Gonzales said. Where BusinessLoans can be really useful is for small businesses that have gotten a “denial” from a bank. Once a company receives a denial, it must go through the arduous process again with no guarantees, he said.
BusinessLoans looks beyond the typical required documents and credit score. Instead, the business looks at the cash flow goal, how long the business has been open, annual revenue, and business history.
Daniel Marsh, chairman of the non-profit National Development Council, warned that businesses need to consider certain issues when applying for a quick loan. Unlike traditional banking institutions, online alternative lenders are unregulated, he said.
Some online lenders automatically accept credit card receipts to repay the loan, Marsh said, but that can hurt the small business in the long run. Having to pay off high-interest loans before you can get cash for inventory or receivables can quickly bring a business down, he said.
“When small businesses need cash, they’re willing to sacrifice pricing for speed and flexibility,” Marsh said. Alternative loans can bring money out, but they don’t always allow businesses to grow, he said.
The idea of starting the BusinessLoans began at the end of 2020, when the first cycle of the payment protection program ended. As he sat on the couch watching the news, Gonzales recalls, he saw the difficulties small businesses face in qualifying for loans.
Gonzales previously worked at On Deck, an online lender, for six years. In this role, he helped match clients with lenders. But the process was complicated and difficult to navigate, he said.
Building on his experience, Gonzales started BusinessLoans to create a seamless platform to match small businesses in the marketplace with lenders. The majority of small businesses are matched with alternative financing lenders because they are looking for money as soon as possible, Gonzales said.
A lot of fraud has surrounded PPP loans, leaving small businesses vulnerable during tough times, Gonzales said. He’s watched how online nonprofits like the DEXSTA Federal Credit Union have begun to fill that void. However, many small businesses did not know where to turn for credible information.
The technology connects businesses with verified vendors who are vetted, and the same goes for making sure vendors aren’t duped by customers, he said.
BusinessLoans partners with alternative lending companies such as Fundbox, OnDeck, SmartBiz, GetBackd, BlueVine, DreamSpring and CoverWallet.
“We really wanted to create a platform that was a bit more transparent,” Gonzales said.
The majority of clients are small brick-and-mortar businesses, Gonzales said, noting that transportation and hospitality is a growing sector in loan demand. Many companies are looking to expand, he said. When they turned to traditional banks for loans, Gonzales said, many were turned down.
According to a 2020 Small Business Administration study, bank consolidation over the past four decades has made it increasingly difficult to access small banks. Without community banks to turn to, many small businesses are locked out of credit. to treat.
Big banks tend to lend to big companies that have the resources to have strong track records, and they’re less willing to lend to companies that have “challenging” credit ratings, according to the study. Community banks tend to look at the larger context before lending to small businesses, and they are willing to accept riskier loans.
When asked if streamlining online activity would make it easier for people traditionally unable to get a loan from a bank, like people of color, Gonzales replied, “I hope so. “
The website does not track ethnicity, Gonzales said. BusinessLoans, however, partners with the Community Development Financial Institutions program to help people in low-income zip codes or businesses that haven’t been there for a long time get a loan, Gonzales said.
“Working with small businesses most of my life, it’s always been one of those passions (to help them),” Gonzales said.