Marketplace Lending – Some Players Small Business Owners Should Know

The past three years have been an exciting. I’ve witnessed the rise of the alternative lender, also known as the marketplace lender. In any industry where there is a void, there is an entrepreneur with an idea to fill it. This happened in the last eight years in small business lending. As traditional banks contracted their offerings to small businesses for various reasons, the marketplace lender stepped into this opportunity.

Since my first dealings with marketplace lending three years ago, I‘ve been in contact with at least 100 different vendors. Like I said, there is opportunity. Where there is opportunity there is investment. As in any new industry there are firms that do things better than others. Additionally, although labeled as marketplace lenders, it’s not a one-size-fits-all industry. I want to point out a few of the companies I think do a great job and share some insight to the funding scenarios that best suit these companies.

During my morning commute for the last couple of months, I’ve heard the advertisements for DealStruck. DealStruck offers various customizable loan products for small businesses with an approval of up to $250k for a term loan or $500k on lines of credit. Both within minutes of applying. They’ve invested in technology to eliminate the confusion or hassle of applying for a loan through traditional channels. The firm that’s looking for flexible terms and a small business expert to help them understand the best product for their situation is a good fit for DealStruck. Their three most popular options are:

  1. Business Term Loan for growth

  2. Inventory Line of Credit for seasonal purchases or anticipated growth

  3. Asset Based Line of Credit to leverage your accounts receivable base and get cash while you’re waiting for customer payments

Another option for up to $500k in funding is Fundation. Fundation is different from DealStruck in that  they stick to the type of loans we’re most comfortable with, the conventional term loan. What I like about Fundation is the personalized concierge service that truly strives to build a relationship with the business owner. Every part of the Fundation application and loan servicing process is designed to build trust and set the “foundation” for a long-term relationship. 

Lastly, I wanted to highlight a different type of lending designed for smaller firms with a lower funding requirement. Fundbox offers small business owners the chance to streamline their cash flow by advancing on unpaid invoices. Instead of charging you interest, they charge you a weekly fee for every week you have an unpaid balance. So you only pay for the weeks you are waiting for customers to pay invoices. On their website, the fees seem reasonable. On a $1000 advance, the average fee is approximately $5 per week. For a smaller firm that needs to make payroll or purchase more inventory, this may be an expedient way to smooth out short term cash flow issues.

Small business owners are currently in the best position they’ve ever been in when seeking funding for their business. Marketplace lending has opened up new and creative ways to help small business owners fund their growth or overcome operational issues. Trust is a big key in working with an online lender. It’s not like you can walk into the branch and talk to a loan officer. These three companies have earned my trust. I’ve met some of the principals in each of these companies and have watched them build their business. If you’re looking for money and are having difficulty finding the right fit, give these three a try.