Apr 28, 2017
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Lendio Wants To Be The 'Kayak For Small Business Loans'

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If you’ve ever applied for a loan, you know the painful process of comparison. Who has the best interest rate? Who will work with your credit score?
Lendio made the process shorter and simpler with a single application. The firm’s platform eliminates ineligible matches as clients enter their financial background and need, so users are left with the few potential lenders worth reaching out to.
Benzinga sat down with Lendio Founder and CEO Brock Blake to discuss the business.
Benzinga: Would you mind telling me a little bit about just what Lendio is and what exactly you do?
Lendio Founder and CEO Brock Blake Blake: So Lendio is a marketplace for small business loans. What that means is we have about 75 lenders on our platform. We are not lenders, ourselves. We create a marketplace so when business owners come to Lendio, they fill out one application and it gives them access to all our 75 lenders. So it is kind of like a Kayak for business loans. The business owner comes in, fills out the..

If you’ve ever applied for a loan, you know the painful process of comparison. Who has the best interest rate? Who will work with your credit score?

Lendio made the process shorter and simpler with a single application. The firm’s platform eliminates ineligible matches as clients enter their financial background and need, so users are left with the few potential lenders worth reaching out to.

Benzinga sat down with Lendio Founder and CEO Brock Blake to discuss the business.

Benzinga: Would you mind telling me a little bit about just what Lendio is and what exactly you do?

Lendio Founder and CEO Brock BlakeLendio Founder and CEO Brock Blake

Blake: So Lendio is a marketplace for small business loans. What that means is we have about 75 lenders on our platform. We are not lenders, ourselves. We create a marketplace so when business owners come to Lendio, they fill out one application and it gives them access to all our 75 lenders. So it is kind of like a Kayak for business loans. The business owner comes in, fills out the application. We submit the application to the lender matches. Those lenders underwrite the loan and give us an offer or a decline. Then we compile those offers for the borrower so they can comparison shop the rate, the term, the payment amount.

Benzinga: How did you come to perceive this need, and why did you decide that this was the best way to solve it?

Blake: Well, I knew that there are millions of small business owners across the United States, and each of these business owners have a passion to be able to grow their business. They need access to capital to buy equipment or hire employees or expand or open a new location or those types of things. I became very familiar with this pain where business owners go looking for a loan. They go bank to bank to bank, filling out applications, and getting their credit pulled. It is a painful experience, and they come out of it and they still might not get approved for the loan.

A lot of times they think I’m not getting approved for the loan because I have bad credit, but that’s not always the case. The reality might have been they are actually a good credit borrower, but that bank does not offer the loan that you need. So it was really inefficient. They went to the wrong place. So just like in other markets, whether it be in travel or other places, to be able to create a place where you can go one stop and do comparison shopping we felt like would help that business owner to solve that problem.

Benzinga: What would you say is the scale of the problem? How big is the need?

Blake: Well there are about 28 million small business owners across the United States. Most of these business owners on average are looking for financing every three to five quarters. Suffice it to say it is an enormous pain in the market and a big pain for these business owners.

Benzinga: Who is your target audience?

Blake: We are really focused on Main Street business owners. Restaurant owners, landscapers, dry cleaners, manufacturing organizations and anyone you would think of as Main Street businesses.

We get quite a few business owners in from the restaurant and retail spaces for whatever reason. I think we really appeal to that segment of customers and helping a lot of them to get access to loans.

Benzinga: What is your business model?

Blake: It is free for the small business owner. We get paid by the lender. The lender pays us when the loan closes. That is important. We are not a lead gen site where you come in, you sign up and we sell your lead off to a bunch of lenders. We actually handle the customer experience from start all the way until the loan closes. We want to make sure that we are consultative, we are answering your questions, we are recommending good suggestions for you, and have a funding manager there to be able to help you through that process.

Benzinga: How do you partner with these lenders?

Blake: So we have a bunch of lenders on our platform, both bank lenders and non bank lenders, some of which we have gone out and pursued and added them, saying, hey, we can bring you customers. Others have approached us saying, hey, we are looking to get more volume and do more loans and we know that Lendio does a decent amount of volume and we would love to be able to be added to your platform. Either way, we go through a little bit of a vetting process where we try to determine what is their customer experience, what is their underwriting like, what is the credibility and their business practices to make sure that we are comfortable referring a customer to that lender. But in some cases they have come after us and in other cases we have gone after them.

Benzinga: How does the process actually work?

Blake: There are 75 lenders in total. It is an online application, and as you are filling out the application form, the application is dynamic. So you start with 75. You answer a question and, based on your responses, it might have narrowed the list down to 30 just off one question. Then you go to the second question, and when you answer it maybe it has narrowed it down to 15. So as you keep filling out the application, we keep narrowing down the list of which lenders are the best fit for your situation until the end where we have three to five lender options that are a really good fit for what you are trying to accomplish.

Once they have gone through that process, we have a validation process where we know it is a good match for this lender, but do we have everything that we need for that lender to underwrite it? That lender may need six months of bank statements. Let’s validate that. ‘Oh, it looks like we’ve only have five months of bank statements. We need to get one more month of bank statements.’ So we validate that the application is complete. Once we know it is complete, then we hit submit and we send that off to our lenders. Once they get the application, they underwrite it and make a decision, and then they send it back to us.

Benzinga: How many businesses have you helped get loans for?

Blake: I’ll give you some stats. In Q4, we funded about $70 billion in loan volume. In total, we are just over $400 million that have been funded on our platform across, I think it’s around 12,000 to 13,000 businesses, around there.

Benzinga: Where do you see yourself fitting in the general fintech market?

Blake: I like to compare to travel. If you look at other industries like travel, let’s use airlines for example, all the airlines were established, Delta, American Express, United and people would fly through them. Then you come in later on top of that, a marketplace like a Kayak. Kayak allows us to go to one place and comparison shop to find which flight is the best fit for us.

Whether it be Kayak or Priceline or Expedia, now as a consumer or traveler, we are very familiar with these sites and we use them on a very frequent basis when we’re looking to travel. They are an important part of the marketplace. We feel that same way, that we are representing that type of experience in lending to be able to say, look, we’re not the lender. We’re not trying to compete with them. What we are trying to do is make it easier for that borrower to get access to the right lender.

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