In this innovative digital age, new businesses have more opportunities available to them than ever for funding a small business. From traditional small business loans to factoring to merchant cash advances, startups can often feel overwhelmed by the choices presented to them. Searching for “small business finance” on Google yields 182 million results; sifting through the options and trying to understand what’s best for your new or existing business is a tiresome task indeed.
Matching Small Business Financing Opportunities with Companies in Need
That’s where companies like Lendio and Nav (previously Creditera) come into play. They serve as online lending marketplaces for small businesses making the search for the best financing option a less daunting task. Instead of the applicants searching for loans, the lender or financing company searches for them based on the criteria and information they’ve presented about themselves.
It uses a computerized system that matches what the applicant needs with those lenders that offer that. These marketplaces do not serve as lending institutions themselves but rather partner with them instead. Rather than submitting numerous applications for several different banking institutions for a small business loan, the applicant simply submits one via the marketplace.
These online financing marketplaces serve as a type of broker between small businesses that need start up funding and the institutions that offer it. Rather than a traditional broker, it relies on computerized matching so there’s minimal human interaction. The use of automated systems makes the online financing marketplace less expensive than using a broker or middleman. But are they as effective?
These Marketplaces Provide Small Business Funding Options When Banks Say No
The concept of such an online banking marketplace stemmed from serial entrepreneurs who were routinely frustrated with the hassles and headaches of finding and applying for traditional small business loans. They were left feeling out in the dark about the whole loan application and approval process and the related credit score assessment.
Moreover, when they were denied loans, they weren’t presented with other options. When businesses cannot receive a loan via the online marketplace, they are pointed to other alternative commercial financing options such as invoice factoring or merchant cash advances. Companies like Creditera are helping startup businesses better manage and stay on top of their credit in much the same way companies like CreditKarma does for consumers.
Companies like us are creating an online resource for alternative financing options, such as factoring, so that business owners do not feel stuck.