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Small business lending has come a long way since the period immediately following the financial crisis. Back then, small business lending all but dried up when traditional banks abruptly increased their lending requirements. Since then, a whole new fintech industry of online lenders has emerged and gaining steam as an alternative to traditional banks. These online lenders have filled the void left by traditional banks in serving small businesses with a straightforward, quick, and easy loan process. However, business owners often end up paying more in loan costs than is necessary. That is where the new fintech startup SMBRate comes in.
Background on SMBRate
Launched in 2016, SMBRate set out to help small businesses find the best small business loans for their needs. Dubbed the “Kayak for small business loans,” SMBRate uses an extensive data analytics platform to determine what type of loan a business can qualify for and then matches it to lenders willing to offer it. The concept caught the eye of Y Combinator, a seed accelerator for brand new startups, which invited SMBRate to its 2017 camp along with dozens of other venture hopefuls. After presenting its case on Demo Day, SMBRate was awarded with $120,000 of seed money from Y Combinator.
How SMBRate Works
SMBRate now works with more than a dozen of the top online lenders, including Kabbage, BlueVine, Fundera, FundBox, and Prosper to bring the best loan offers to its business customers. It works very much like LendingTree, where a borrower logs online and inputs information about themselves and their loan needs. Once the application is submitted, LendingTree sends it out to its network of lenders and the applicant receives offers to review.
SMBRate is a little different in that, instead of relying upon a credit score and personal financial information of the borrower, it uses its extensive database to collect information on the business. The data is used to learn more about the business, its market, revenue expectations, and growth prospects. It focuses on current cash flow as the main factor in the business’s ability to repay the loan. SMBRate does all of the legwork to verify the banking credentials and then presents the data to the lenders. Within a matter of minutes after submitting the application the business owner receives anywhere from 10 to 20 offers to review and compare.
A Borrowing Resource for Business Owners
There’s no charge for using the SMBRate platform, even if a business owner just wants to go on it to see what might be available for a future need. For business owners who have trouble qualifying for a low cost loan, SMBRate offers education and resources to help them get positioned for better financing options.
As the small business lending market grows more crowded it opens up more opportunities for business owners to be able to get the financing they need. But, it is also getting more complicated and more difficult to find the right lender and the right loan. SMBRate aims to solve that for business owners by making the process more transparent and easier to understand.
Author: Jeff Gitlen