Amid the current slew of mortgage and lending news, the small business loan provider BlueVine is tacking its own service, dubbed Flex Credit, into the fintech wind. This allows the firm to offer lines of credit between $5,000 and $30,000, with transparent fees and pricing.
A recurring problem for individual and small business borrowers are the inflexible credit lines which fix the number of withdrawals allowed before principal is paid back. This is less a problem for the Goliaths than it is for the Davids, of course. Long-time friend of small business ventures BlueVine introduced Flex Credit to remove this irksome waiting time from the small business loaning process. Simply put, Flex Credit is a revolving business line of credit that allows small businesses to tap into lines of credit whenever they want, so long as they meet a few reasonable prerequisites. BlueVine’s CEO and founder Eyal Lifshitz explained:
The requirements are minimal: a minimum of six months in business, $60,000 annual revenue, and the principal FICO score needs to be at least 600. When a small business draws, they repay over six months in monthly installments, allowing a business to withdraw again so long as credit is available.
According to Lifshitz, the revolving nature of this flexible credit is not only rare, but precisely what small business owners pine for for a variety of reasons. Since clients can pay the loan back at their leisure, they can withdraw in a pinch and return the amount the next day, which allows them to take a subsequent loan out in two weeks. This is a little like putting a jet pack on a skydiver.
Lifshitz says Flex Credit was developed out of market demand, both with established relationships and new ones asking for this service up-front. Generally loan products allow the provider to underwrite once, then repay over six months, twenty-four months, even three years. However, referring to BlueVine as a financial partner and not a service provider, Lifshitz says his company prefers to interact with clients every day. Such increased frequency of contact means old fashioned Excel spreadsheets aren’t going to cut it in underwriting.
There needs to be a lot more micro-underwriting decisions… this requires a lot more technology. You really need to have robust underwriting mechanism, and you need to be able to monitor scrupulously.
BlueVine launched a closed beta about three months ago, and Flex Credit was publicly announced a few weeks ago. But even in such a short amount of time, Lifshitz remarked that BlueVine has noticed that clients have withdrawn from their lines of credit five or six times.
Of note in this new venture is BlueVine’s new VP of Finance and Strategy Ana Sirbu, who came to BlueVine by way of Google Capital after over a decade of experience in financial technology, including investment banking at UBS.Like This Post