You Want A Small Business Loan For What? – Forbes

Stewart suggests, If the business owner is willing to roll up his or her sleeves with me, I can help them. Stewart suggests that if the only small business borrowers youre willing to work with are the best borrowers, the A borrowers, youre missing out on the lions share of your potential customer base. Which he feels like is roughly 70 percent of the small business loan marketwhich illustrates another change in the market. Non-bank innovative lenders as Green likes to call them, are taking a different approach to how they look at a potential small business borrower and his or her risk profile.
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How Much Is Too Much to Pay for a Small Business Loan? – Businessweek

Clients own dry cleaners and restaurants, trucking companies, and daycare centers. Most are Latino or African-American, and many are recent immigrants who don’t speak fluent English. Diniz’s financials were strong enough that she qualified for a small-business loan right away. But many entrepreneurs who were coming to Opportunity Fund were unable to qualify for loans, even if they had strong sales. An entrepreneur might have a poor personal credit score, for example, or run a highly seasonal business, like a flower shop. So the organization decided to create a loan that could be repaid through automatically deducting a small share of credit- and debit-card sales. The technology wasn’t new it had long been used by merchant cash-advance providers. “The intention of EasyPay was: How can we look at this business a little differently? How can we give more weight to the cash flow side of the business?” says Alex Dang, a business development officer.
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Micro-Lending Is an Alternative to Payday Small Business Loans

We think it is, said Andrea Gellert, the OnDeck executive.APRs somewhat distort the true economic costs and the cost-return relationship on the loan. To make that point, Gellert posited a hypothetical business owner who has a limited amount of time to buy discounted inventory. If I buy that inventory for a dollar and sell that inventory for $2 in a six-month period, thats a 200 percent return. So my 54 percent cost makes absolute sense. I will make that tradeoff every single time. Alternative lenders like OnDeck are becoming increasingly popular. They topped $3 billion in loans last year, according to one recent estimate , double the amount of loans for less than $150,000 guaranteed by the Small Business Administration. At the moment, alternative loans are largely unregulated. For the banking regulators that hosted the Fed conference, theres a follow-up question worth considering: If APR isnt the right way to evaluate short-term business loans, what is? The industry suggests looking at something called net promoter score , a measure of customer satisfaction that Gellert cited at the New York Fed. Two of her fellow panelists, Lending Club Chief Executive Renaud Laplanche, and Darrell Esch, a vice president at PayPals ( PYPL ) small business lending programalso lauded the metric. Executives at alternative lenders also argue that high renewal rates show the loans are serving borrowers.CAN Capital CEO Dan DeMeo, whose company competes with OnDeck,has said that 75 percent of his companys customers come back for additional loans, indicating a high-level of satisfaction.
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