DEEP DIVESExclusive to Strategy Plans
May 7, 2019
Where do entrepreneurs go for small-business financing? Banks may not be an obvious answer for this. SMEs (with <500 employees) account for ~99.7% of the total employer firms in the US and contribute nearly half of the non-farm GDP of the nation. Only three out of every four of these SMEs manage to get adequate financing through loans, credit cards, venture capital, or crowdfunding. While recent surveys indicate that banks have planned to grow their small-business lending operations in 2018–2020, FinTechs had identified this SME financing gap in the US a long time ago and have established themselves as alternative financing options for the SMEs.
According to the American Bankers Association, For now, non-bank alternative lenders have the upper hand on efficiency… Operating expense as a percentage of outstanding loans run at approximately 6% at banks that use traditional processes, compared to less than 2% at the non-bank alternative lenders.
While banks may try to play catch-up, FinTechs continue to make a difference in the US’ SME financing landscape. Here’s a look at 19 such SME financing FinTech firms in the US:
Kabbage was founded in 2009 and has raised $489 million in total funding. Kabbage provides SMEs with a line of credit by evaluating various alternative data parameters. It leverages data generated through business activity such as accounting data, online sales, shipping, and dozens of other sources to understand performance and deliver fast, flexible funding in real time. Kabbage also provides white label platforms to companies wanting to start their own lending platforms. The company has been featured on the top lists of Forbes, Fast Company, Inc 500, and most recently, CNBC’s Disrupter list.
C2FO was founded in 2008 and has raised $197.7 million in total funding. C2FO is an online B2B marketplace that uses a bid system and algorithms to match buyers sitting on extra cash with suppliers ready to accept discounts for payments.
BlueVine was founded in 2013 and has raised $183.5 million in total funding. BlueVine allows small businesses to get paid immediately on their outstanding invoices. With BlueVine, companies can free up their cash to pay for expenses and grow their business. The company offers credit lines starting at $5k for a business line of credit and $20k for invoice factoring.
OnDeck was founded in 2007 and has raised $177 million in total funding. OnDeck is an online platform that provides loan financing to small-and-medium-sized businesses. The company uses data aggregation and electronic payment technology to evaluate the financial health of small-and-medium-sized businesses and efficiently deliver capital to a market underserved by banks. The company had its IPO in December 2014.
Behalf was founded in 2011 and has raised $156 million in total funding. It offers on-demand purchasing solutions to US-based SMBs. It provides access to short-term financing for businesses of all sizes, with flexible repayment terms. Behalf evaluates the creditworthiness of an individual by leveraging big data analytics. Instead of directly issuing funds to the SMB, the company finances the small-business vendors on its behalf.
Fundbox was founded in 2012 and has raised $108 million in total funding. Fundbox offers business owners a simple way to fix their cash flow by advancing payments for their outstanding invoices. Fundbox advances thousands of invoices weekly, offering small-business owners the ability to optimize their cash flow by advancing payments for unpaid invoices.
CAN Capital was founded in 1998 and has raised $63 million in total funding. CAN Capital is a provider of small-business financing. The company has provided $7 billion in working capital to small businesses in the US, serving over 81,000 startups.
Lendio was founded in 2011 and has raised $53 million in total funding. Lendio is a platform that helps small-business owners to find lenders and secure loans.
SmartBiz Loans (formerly known as Better Finance) was founded in 2009 and has raised $37 million in total funding. SmartBiz Loans is a financial technology company which provides innovative solutions for small-business lending. The company was founded by a team of experienced financial services entrepreneurs with backing from leading venture capital firms including Investor Growth Capital, Venrock, First Round Capital, Baseline Ventures, and SoftTech VC.
ApplePie Capital was founded in 2014 and has raised $36 million in total funding. ApplePie Capital provides a franchise financing platform. The company’s franchise loan marketplace enables franchise entrepreneurs to access capital from their growing network of individual and institutional investors, as well as the entrepreneur’s own network and community. The company offers loan ranging from $100,000 to $1 million, with terms of three to seven years.
StreetShares was founded in 2014 and has raised $32 million in total funding. StreetShares provide a digital lending platform for American small businesses. The company describes itself as ‘Shark Tank meets eBay’ because it serves as a platform where small-business owners pitch their loan requests to the community of StreetShares investor members.
FastPay was founded in 2009 and has raised $15 million in total funding. FastPay is a finance platform which provides specialized lines of credit to digital businesses. By combining proprietary technology with industry experience, FastPay can quickly assess the creditworthiness of a digital business and provide loans ranging from $100k to several million in under 48 hours to help their customers effectively manage their cash flow.
Bond Street was founded in 2013 and has raised $11.5 million in total funding. Bond Street is a startup focused on transforming small-business lending through technology, data, and design.
Dealstruck was founded in 2012 and has raised $9.5 million in total funding. Dealstruck’s lending marketplace connects profitable, small-and-medium-sized businesses with individual and institutional accredited investors.
LiftForward was founded in 2013 and has raised $6.3 million in total funding. LiftForward operates a marketplace loan platform which provides loans to small businesses and high-yielding debt products to investors. Businesses can borrow up to $1,000,000 per transaction for asset purchases, purchase order financing or working capital. LiftForward partners with suppliers, retailers, and manufacturers to provide financing to small-business customers.
InterNex Capital was founded in 2015 and has raised $3 million in total funding. InterNex Capital is an asset-based digital lender which provides revolving lines of credit from $250k to $5 million to small-and-medium-sized businesses. InterNex can optimize underwriting, monitoring, and funding through its integrated technology, data analytics, and credit scoring algorithms. The company aims to solve short-term working capital needs to an underserved market segment of small-and-medium-sized businesses.
Expansion Capital Group was founded in 2013 and has raised $2.1 million in total funding. Expansion Capital Group provides business owners with working capital financing.
Super G Funding was founded in 2008. Super G Funding provides financing solutions for small-business organizations with loans ranging from $100,000–$5,000,000. Super G Funding specializes in residual and commission-based loans in addition to traditional cash flow loans. Super G Funding offers residual loans to a variety of industries such as merchant services, ATMs, and insurance brokers. The program enables companies with a recurring monthly residual or commission to borrow against the lifetime value of that cash stream.
Credibly was founded in 2010 as ‘RetailCapital,’ which later rebranded in 2015. It is an online platform which provides secured and unsecured business loans of up to $250,000 in the form of business loans, merchant cash advance, business credit cards, fast cash advance, line of credit, working capital financing, and small-business loans. Credibly leverages data science and analytics to improve the speed, cost, and choice of capital available to small businesses in the United States.
Update on May 8, 2019
An analyst from our team drew our attention towards three more interesting FinTech that should qualify for this list:
Funding Circle is a UK-based, leading online marketplace lender which exclusively focuses on small business and has operations in the US, Germany, and the Netherlands. It was created with the idea of revolutionizing the antiquated banking system and securing a better deal for everyone. Funding Circle was founded in 2010 and has raised $373 million till date.
Fundera was founded in 2013 and has raised $14.9 million in funding. It is an online marketplace that connects small business owners with the best funding provider for their businesses. Fundera works with hand-picked, pre-screened lenders to assemble the highest-quality funding sources for small-business owners and ensures borrowers receive fair terms and rates on each loan.
Lending Club was founded in 2007 and has raised $123 million in funding. Lending Club is an online credit marketplace that facilitates personal loans, business loans, and financing for elective medical procedures. It enables borrowers to access lower interest rate loans through a fast and easy online or mobile interface. Investors provide the capital to enable many of the loans in exchange for earning interest. In April 2014, Lending Club acquired Springstone for $140 million in cash & stock. It was named one of Forbes’ ‘America’s Most Promising Companies’ three years in a row.