Despite the mental image it may evoke (see above), a business loan marketplace is not a physical location you can visit to pick out a business loan along with your weekly produce. It’s also not just a fancy or creative name for an online loan broker, although there are some similarities. A business loan marketplace is a company that operates an online platform encoded with algorithms and in some cases artificial intelligence, to match your loan needs with the correct lenders or investors. Additionally, a business loan marketplace is not a lender search engine that populates lender results for you to contact directly. The company that hosts the marketplace will often utilize its advanced technology along with a concierge-style service approach to help process, approve and fund your loan via the lender or investor/s it identifies for you.
Usually business loan marketplaces offer a competitive advantage over and above utilizing a traditional loan broker or an online search. By aggregating lenders and/or investors with a defined appetite for specific loans, and using technology to pre-screen your loan request; a business loan marketplace can not only save you significant time, but also eliminate the risk of having your credit pulled unnecessarily. A business loan marketplace may charge a fee for its service, or is sometimes compensated directly by the lenders or investors it partners with. However, any added cost incurred to utilize a marketplace is often less than the economic cost of selecting the wrong lender, being subject to multiple credit pulls, or spending days or weeks vetting and attempting to locate the right capital source for you.
Bank Business Loan Marketplace
San Francisco, CA based SmartBiz was an early implementer and trailblazer of the business loan marketplace model. SmartBiz was able to identify a significant inefficiency present in small SBA loans of $350,000 or less, and develop proprietary technology to allow banks to make more small SBA loans in a shorter time-frame. Prior to the creation of SmartBiz, most banks, even large ones, would shy away from small SBA loans because the operational cost of providing them exceeded the potential revenue. With its unique technology, SmartBiz was able to automate the small SBA loan process for banks and speed up the funding process to as short as 7 business days after an application is completed.
SmartBiz has since expanded its marketplace and improved its software to introduce a bank term loan product from $30,000 to $200,000. Business term loans obtained through SmartBiz can fund in as little as 2 business days, interest rates are as low as 6.99% and can be fixed for up to 5 years. SmartBiz’s process and technology is so efficient, that almost 90% of the loans matched through its marketplace get approved for funding.
Alternative Business Loan Marketplace
Kansas based Strategic Capital is an innovator in the alternative business loan space. Its marketplace focuses on matching non-conforming business owner borrowers with one of 150 lenders currently aligned with its platform. Strategic Capital’s simple online application utilizes a soft credit pull so your score will not be affected, and aggregates the basic necessary data to analyze your financing needs and match you with the correct lenders. Strategic Capital employs a waterfall system that will identify appropriate lenders on a priority basis, meaning the lenders that are the best match for you will be approached first. Strategic will also manage your file from application to funding to ensure you receive the highest level of service and the most affordable business loan. Because of its unique system and deep lender base, very often borrowers who have not been approved for financing elsewhere can obtain a business loan through Strategic Capital. The firm presently approves over 84% of applicants for business financing.
A business loan marketplace can be an effective tool to quickly and efficiently locate the right financing for your business. By leveraging the technology and experience of a marketplace operator, you can significantly cut down on the time it takes to obtain a business loan as well as avoid the unnecessary costs of picking the wrong lender yourself. Additionally, the customer service and processing support a marketplace provides can expedite your closing time and ensure you are being aligned with the lowest cost of capital for your business.