OK, maybe not that fast, but faster than I’ve ever heard of. Last week I met Evan Singer from SmartBiz for the first time. Yes, they specialize in small Business ready. Yes, they have SBA loans under $ 150,000 calculated like a science. And yes, they are on the Lendio platform, but their relationship with Lendio isn’t the reason I talk about them, nor am I paid by them to share their story.
What they do is really good for the the smallest small enterprises. That’s why I’m talking about them.
Last October, the Small Business Administration removed fees on SBA-guaranteed loans under $ 150,000. I have already publicly supported this SBA initiative. I think it’s an effort to put more capital in the hands of the main street businesses that create jobs and help local economies thrive and grow. Although the average SBA loan last year was closer to $ 380,000 and the previous year was around $ 327,000, it may be interesting to note that before the 2008 financial crisis, the average amount The SBA loan was closer to $ 175,000, more in line with the needs of Main Street — or smaller small businesses rather than larger smaller businesses.
I have spent most of my career on Main Street (as a business owner and employee). I also spent a few years working in high tech companies, one of which had a turnover of around $ 30 million a year and employed over 250 people at the time, a company that was still considered a small business but very different from what I experienced on Main Street. This business would be more inclined to apply for an SBA loan in line with the current average than the typical small business that you and I probably identify with.
The typical SBA loan process is cumbersome and often disappointing for small business owners who go through the paperwork, go months back and forth and ultimately find they don’t qualify for the loan they are looking for – not because it’s too much, but often because it’s too little and too expensive for most financial institutions (to be fair, when the underwriting burden associated with a $ 50,000 loan is about the even a $ 500,000 loan, can you really blame the banker who goes upstream and potentially more lucrative fish to fry?).
“Because bank financing typically takes so long or is not available for loans under $ 150,000, most small business owners turn to alternative and more expensive sources of lending like cash advances from banks. merchants or credit cards to fill the void, ”says San Francisco District Manager, US Small Business. Administrative Mark Quinn.
There are cases where a merchant cash advance or a credit card is the perfect solution for a small business borrower; Unfortunately, for many business owners, this type of financing is the only credit available today. SmartBiz is making low interest SBA loans available to Main Street, which got me so excited.
I believe it was Aesop who coined the expression “Necessity is the mother of invention”. Nowhere is this more true than small business loans. Evan Singer and his team at SmartBiz saw a need and leveraged technology to solve it.
“Quick access to cheap capital is one of the biggest challenges facing small business owners,” says Singer, CEO of SmartBiz. “Small business owners avoid SBA loans because the conventional bank lending process can take weeks or months to complete. “
By taking the application online, these people have eliminated much of the cost, time, and paperwork associated with applying for an SBA loan (I hope the SBA and its group of member banks take a lesson or two of these. guys). This technology cuts the typical application process from two to three months to less than 30 minutes with a very borrower-friendly application, instant pre-approval, and funding in as little as five days after completing the application. Yes, I said five days, unheard of for an SBA loan.
They do this by looking for very specific borrowers who, in turn, look for loan amounts within a specific range. They offer predetermined loan products from $ 5,000 to $ 150,000, and call them. When I asked about credit requirements, Singer’s response was, “Borrowers have to have good credit, but they don’t have to be perfect.”
Potential borrowers must qualify for an SBA loan, so it’s not for everyone. However, I think this is a powerful motivator for small business owners who might be on the verge of getting their financial situation in order because a low interest loan guaranteed by the SBA is not out of reach if they are looking for the money. to buy a new pizza oven, dentist’s chair, machine tool, warehouse expansion, or to meet dozens of other growth-related cash needs.
I agree with Singer when he identifies accessing cheap capital as one of the biggest challenges small business owners face every day. If you can’t tell, I couldn’t be more enthusiastic about what Singer and his colleagues are doing.
“We’ve been working with the SBA on this from the very beginning,” he shared with me. I can’t wait to see if more will come from this partnership with Golden Pacific Bank (their lending partner), the SBA and SmartBiz. I am convinced that this type of strategic and innovative approach to small business lending, combined with well-tailored alternative lending products, represents the future where Main Street will find the capital it needs to grow the economy, hire people. employees and keep local communities strong.