Lending, especially for small businesses, is an area that has been technologically stagnant for years—which is probably why at the moment it feels like it’s saturated with fintechs.
But just because it’s fintech doesn’t mean it’s good, as Simple CEO Josh Reich noted recently. The burning desire to see real disruption in this space has led to the creation of innovative startups like Bond Street and Plousio, which are each approaching the pain points of small business lending in their own way.
Bond Street, begun three years ago out of the founders’ exasperation with the small business loan process, offers loans starting at $50,000 and capping at around $500,000. Plousio, a younger startup still in its first year, having launched this past January, works with lenders to provide loans starting at $5,000 and capping at about $1 million.
“If you Google ‘small business loans’ you’ll probably get hundreds of pages of ads,” said Francis Pierre, strategic partnership and business development manager for Plousio. “We want to create transparency and clarity for small business owners; when users come to our site we want to be very direct.”
According to David Haber, CEO and co-founder of Bond Street—who expressed an equal wish for transparency in the industry—the company’s average loan is around $150,000, close to 13% interest, and closer to three years in term than the company’s minimum of one year.
“We were seeing a large ecosystem of businesses who maybe didn’t check every box at a bank, but just intuitively didn’t seem to warrant 40%, 60% interest rates,” says Haber. “We want to empower [businesses] to make smarter decisions.”
But as Pierre stated, that can only be done when the process of financing your business is clear and secure—not to mention the lenders, who as Pierre states, are really looking for “good quality leads.”
“We want to find that sweet spot [for lenders], and help business owners find the right loan without hassle,” says Pierre, adding that due to the somewhat aggressive nature of the alternative lending space in particular, users were hesitant to even begin shopping online for a loan in case they were immediately bombarded with emails, promotions, and calls.
Plousio avoids all of that by providing its users with anonymity, allowing them to fill out a simple profile without inputting personal information, where an algorithm then provides them with matches.
The amount of direct lenders it works with, by the way, makes Plousio the biggest marketplace in play right now, according to Pierre.
The goal for both companies is really to provide both lenders and business owners with a painless, more controlled experience—replacing the quagmire with a straight road.
“We can understand the health of a business in real-time, which is really important, and we’re really excited to continue growing,” says Haber. “Ultimately, every time we’re making a loan, we’re essentially predicting the future.”
Hopefully, that future will be a bit brighter for alternative lending.
To learn more about alternative lending, join us in Tel Aviv for Bank Innovation Israel this November 1-3. Register here.2 - Readers Like This Post