American Express Pay Over Time

Part
01
of five
Part
01

AmEx Pay Over Time Competitors, Part 1

Six US-based competitors to American Express' Pay Over Time program that offer short-term loans, cash advances, business loans, and/or other comparable tools to small businesses are BlueVine, Fundbox, OnDeck, Lendio, Funding Circle, and Kabbage Inc. Details about these competitors, including an overview of what they do, have been provided in the attached spreadsheet. Although Kabbage Inc is in the process of being acquired by American Express, we have included it in this list pending the acquisition. We determined that these are some top competitors to American Express' Pay Over Time program based on their similar extended financing product offerings to the same target market, i.e small businesses in the US, as well as multiple mentions across various financial services sites, including The Simple Dollar, business.org and Nerdwallet. Although Lendio is a lending marketplace that connects borrowers to lenders, including American Express, it maintains a large network of over 75 lenders, offering a wide range of small business loans, hence a competitor.

Findings Overview

  • BlueVine is a Redwood City, California-based financial services company that offers a suite of financial products designed to meet the needs of small business owners, including business checking account services, lines of credit, term loans, and invoice factoring.
  • Fundbox is a San Francisco, California-based fintech company that provides a B2B payment and credit network platform that leverages machine learning and transactional data of small businesses to offer invoice financing and line of credit facilities. Instead of a rigorous application process, the company requires small businesses to connect their accounting software or bank accounts to its platform for eligibility assessment.
  • OnDeck is a multinational online small-business-lending company operating in Canada, Australia, and the United States (US), with offices in New York; Arlington, Virginia; and Denver, Colorado. The company offers term loan, line of credit, and SBA PPP loan facilities to small businesses.
  • Lendio is an online lending marketplace platform that connects small business owners to more than 75 lenders to offer a wide range of credit facilities, including business lines of credit, SBA loans, short term loans, business term loans, merchant cash advances, equipment financing, commercial mortgages, accounts receivable financing, startup loans, and business acquisition loans.
  • Funding Circle US is a multinational peer-to-peer small business loan platform operating in the United Kingdom, Germany, Netherlands, and the United States, with headquarters at San Francisco, California. The company's credit facilities include SBA loans, business term loans, merchant cash advances, business lines of credit, invoice factoring, and working capital loans.
  • Kabbage Inc is a Georgia, US-based financial services company that leverages technology and data from various sources, such as online sales, banking information, and shipping activity, to assess eligibility and offer automated cash flow solutions to small businesses, including quick-access ongoing lines of credit of up to $250,000 through its online lending platform.
Part
02
of five
Part
02

AmEx Pay Over Time Competitors, Part 2

Details about how BlueVine and Kabbage Inc compare, including descriptions of how their products work, their APR, the basis of their interest rates, and links to examples of the companies' most recent creative work have been provided in columns C-D of the attached spreadsheet.

Summary

  • To qualify with Kabbage Funding, the enterprise should be in business for at least one year and have a minimum of $50,000 in annual revenue or $4,200 per month in the last three months.
  • The application requires linking the Kabbage account to financial business accounts, such as PayPal, eBay, Business Checking, and QuickBooks. Kabbage then assesses the business and financial performance of the company, including revenue consistency, cash flow, and the business owner's consumer credit and provides qualification feedback in less than 10 minutes.
  • On the other hand, to qualify with BlueVine, the enterprise should at least have been in business for 3 years, with a monthly revenue amounting to $40,000 and a 650 FICO score. The application requires providing basic details about both the business and the business owner, as well as a bank connection or year-to-date bank statements.
Part
03
of five
Part
03

AmEx Pay Over Time Competitors, Part 3

Details about how Fundbox and OnDeck compare, including descriptions of how their products work, their APR, the basis of their interest rates, and links to examples of the companies' most recent creative work have been provided in columns E-F of the attached spreadsheet.

Summary

  • Fundbox offers funds up to $100,000. To qualify, one needs to have a minimum credit score of 550, and a minimum annual revenue of $50,000.
  • Fundbox requires applicants to provide basic details about their business for assessment and to connect either an approved accounting software, such as QuickBooks or FreshBooks, or a business bank account.
  • On the other hand, OnDeck offers term loans from $5,000 — $500,000 over a 3-36 month period and lines of credit from $6,000 — $100,000, with payback on draws of up to 12 months. With the lines of credit revolving, paybacks increase the total amount of funds available for drawing.
Part
04
of five
Part
04

AmEx Pay Over Time Competitors, Part 4

Details about how Lendio and Funding Circle US compare, including descriptions of how their products work, their APR, the basis of their interest rates, and links to examples of the companies' most recent creative work have been provided in columns G-H of the attached spreadsheet.

Summary

  • Lendio does not lend directly to small businesses. Instead, it connects borrowers to a large pool of more than 75 lenders who offer a wide range of small business loans. Typically, the platform offers lines of credit ranging from $1,000 — $500,000, with a 1-2 year maturity period and a 1-2 week wait time.
  • The applicants need to be have been in business for at least 6 months, have $50,000 or more in annual revenue and a credit score of 560 or higher.
  • On the other hand, Funding Circle US, as a peer-to-peer lender, offers lines of credit ranging from $6,000 — $250,000 with varying repayment periods and terms depending on the lender and the account’s terms.
  • The platform's business term loans range from $5,000 — $500,000 while the term lengths range from 3 months — 10 years.
Part
05
of five
Part
05

Small Business Owners and Credit

Most small business owners indicate that credit is somewhat easy or very easy to obtain. The Wells Fargo quarterly optimism index shows that small business optimism has been on a steady rise since 2017. A survey done by Wells Fargo in May and June indicates little change in small business owners' views on credit

Relationship with Credit

  • According to the Small Business Credit Survey, in the last five years, 44% of small businesses had used a bank for funding, this indicates "a prior lending relationship."
  • According to the survey, "banking relationships are more common among larger firms, firms with better credit scores, and firms with white ownership."
  • Almost half of the firms covered in the Small Business Credit Survey had access to credit. According to the report, 49% of the firms had their financing needs met and only 30% had unmet financing needs.
  • According to a survey done by Wells Fargo in 2019, "53 percent of business owners indicated that credit was somewhat or very easy to obtain in the last twelve months, with the exact same number predicting this level of ease in obtaining credit in the coming twelve months." Only 1% of respondents indicated challenges in credit availability.
  • The Small Business Credit Survey shows that about 88% of small business owners rely on their personal credit scores to access credit.
  • Small businesses' top choices for credit are banks (large and small) and online lenders.
  • The Small Business Credit Survey shows that some firms chose to decline approved financing (about 20% of firms that did not receive the full amount they applied for). Reasons for declining the funds include high-interest rates (73%) and unfavorable repayment terms (63%).
  • An extensive search in market reports, surveys, and media publications did not reveal any information on small business owners' views on short-term vs long-term credit.

Change in Recent Years

  • According to a survey done by the Federal Reserve Bank in 2019, small businesses' "optimism is near a 15-year high."
  • The Wells Fargo quarterly optimism index shows that small business optimism has been on a steady rise since 2017. The optimism takes into account financial factors of running a business including credit.
  • There has been a steady demand for new financing in 2018 and 2019. According to the Small Business Credit Survey, 43% of firms applied for credit in 2018 and 2019. About 40% of firms applied in 2017.

COVID-19 Impact

  • A survey done by CreditCards.com found that "35% of small-business owners in a survey said they’ve needed to tap their own funds." About 24% of those surveyed indicated that they have used personal credit cards and business credit cards (20%) to remain in business.
  • A survey done by Wells Fargo in May and June indicates little change in small business owners' views on credit. About 33% of small business owners interviewed indicated that obtaining credit in the last 12 months was totally easy, while 27% thought it was difficult. Their views for the next 12 months were almost the same, with 34% indicating that it would be easy.
  • The Wells Fargo survey shows that "half of the diverse owners say they applied for PPP loans, attempted to apply, or will apply again if additional funding is available, compared with 31% of nondiverse owners."
Sources
Sources