Small business owners looking for a loan should try hopping online. A handful of companies including BoeFly and Biz2Credit are creating online marketplaces to connect small business owners with lenders.
While the current economic climate has made it tough for small business owners to get a loan, there are banks with money to lend but simply can’t find the right company.
“We heard a lot about how small businesses can’t get a loan or lenders can’t find credit-worthy borrowers,” said Bob Tannenhauser, founder and president of New York-based BoeFly, which launched in March. “We felt there was a great need to bridge that gap and get qualified borrowers connected with those lenders.
Tannenhauser said when a loan is posted on the Web site borrowers have access to banks that are looking for loans.
Currently BoeFly boasts around 850 members including large and small banks, lending institutions, brokers, direct borrowers and investors.
Banks that are looking to lend create a profile by setting their preferences. Borrowers looking for money will fill out an online application and upload supporting documents necessary for the banks to determine if the borrower qualifies for a loan. Lenders interested in a loan will request the supporting documents and the borrower will contact the lender and grant access if there is a fit.
Since borrowers are required to upload almost all the documents needed to determine loan qualifications, the process for getting a loan is much speedier than the traditional way of cold calling banks.
“It really solves a lot of the problem of inefficiencies in small-business lending over the past decade,” said Tannenhauser.
For many small business owners looking for loans, the process has been arduous and requires filling out several applications and providing necessary documentation for each bank they apply with.
Online marketplaces create a one-stop shop to get access to multiple lenders. According to Tannenhauser, who used the service himself, it takes about two hours to complete the application and upload the documents at BoeFly.
Lenders pay $165 a month to have full access to everything on BoeFly.com including a deal flow management tool. Brokers pay $55 a month and direct borrowers pay a one-time fee of $465 to post a new loan request. If a borrower uses a broker to help in the transaction, the borrower doesn’t pay a fee.
Biz2Credit www.biz2credit.com is another online marketplace that matches small business borrowers with lenders. The New York company, which was founded in 2007, boasts $300 million in funding and more than 25,000 small business users in the U.S.
According to the company, an online profile at Biz2Credit can be completed in five minutes, providing users with access to more than 100 lenders, credit-ratings companoes and small business service providers.
Borrowers can register for free, get access to financing options and even work with a case manager that will guide the small business owner through the lending process from completing the application to the day the loan is closed.
For small business users thinking of using the Internet to get a loan, Jana Rouble, a vice president at Community South Small Business Lending in Dallas, said the main thing is to get as much information uploaded and in front of the lender as possible. She said there are banks willing to lend to small businesses that are strong enough to handle the loan.