COMPANY INFORMATION

(1) FUNDING CIRCLE

• Funding Circle is Headquartered in San Francisco, California.

• They have received total funding amount of $422.9 million.

• The company was founded on August 13, 2010.

Value Proposition

• The company offers its borrowers speed and simplicity in accessing loans, with decisions rarely exceeding 24 hours in the UK, and a maximum of 3 days in the US, Germany and the Netherlands. Their online application form only takes 10 minutes to complete.

• Funding Circle boasts of offering the "most competitive" pricing to borrowers. Their prices start at 1.9% annually, for an "A+ rated loan", lasting up to 6 months in the UK.

• They assure their customers have an amazing experience and a very easy and efficient application process.

Target Market

• Funding Circle currently manages investment portfolios in 4 countries globally, with the UK as its main market. Other countries the company operates in are the US, Germany, and the Netherlands.

• Although the company targets businesses operating in several sectors, they have a keen interest in businesses operating in the following sectors: property and construction, professional and business support, manufacturing and engineering, retail, IT & telecommunications. Other sectors are healthcare, leisure & hospitality, wholesale, transport & logistics, and automotive.

(2) LENDIO

• Lendio is headquartered in South Jordan, Utah.

• The company was founded on February 10, 2011.

• Since its establishment, Lendio has received $53.5 million in funding.

Value Proposition

• This company offers small business owners an easy application and document uploading process that only takes 15 minutes to complete.

• They also offer borrowers access to over 75 leading lending organizations, including companies like PayPal, American Express, Bank of America, and Mulligan Funding. The company states that approved loans and dispersed within 24 hours.

• Lendio also ensures that dedicated funding managers are assigned to each small business owner to discuss their needs and the best loan options for them. The support continues throughout the journey of the small business owner until retirement.

Target Market

• Lendio focuses its investments on main street businesses such as restaurants, manufacturing organizations, dry cleaners, landscapers, as well as any other businesses that would be classified within the mainstreet business category.

• The company only operates in the US.

(3) BOEFLY

• Boefly is headquartered in New York, New York.

• The company was founded in 2010.

• They have received total funding amount of $53.5 million.

Value Proposition

• The company offers borrowers a fast and easy single application process with no "loan amount restrictions".

• They help borrowers save time on their loan applications by matching them directly with the most suitable lenders.

• They expose borrowers to a large pool of 5,000+ investors, including banks and individual lenders.

• As an added perk, the company helps borrowers put together an attractive loan package, and provides relevant resources for creditworthiness documentation.

Target Market

• BoeFly mainly targets businesses in six sectors, which are hotel, manufacturing, retail, restaurant, commercial real estate, and services.

• The company only operates in the US.

RESEARCH STRATEGY

NATIONAL BUSINESS CAPITAL AND SERVICES

• Headquarters Location: Bohemia, New York
• Founding Date: 2007
• Value Proposition: National Business Capital and Services assures its customers of integrity, empathy, and respect in business dealings.
• The company promises to "provide an easy and fast path to business financing."
• Through technology, National Business Capital and Services assures customers of a simple, transparent, and fast process to support their businesses and reduce the processing loan time down to hours.
• Target Market: National Business Capital and Services targets small businesses in local communities where they operate with the hope of strengthening their businesses.
• They also target doctors and dental practitioners for funding their practices. Additionally, they fund small businesses looking to purchase equipment through equipment financing.
• Funding Amount: $1+ billion

BECOME

• Headquarters Location: San Mateo, California
• Founding Date: 2016
• Value Proposition: Become customers are assured of a better funding world through algorithms and advanced technology.
• They offer improved funding opportunities and provide business borrowers and lenders with the best possible match at no cost.
• They promise customers an increased chance of securing a loan through its automated application review, transparent lending score, and partner performance programs.
• Target Market: Become's target market includes small businesses looking to purchase equipment, hire new employees, expand their workspace, increase working capital, or strengthen an existing loan.
• Funding Amount: $165 million

SMARTBIZ LOANS

• Headquarters Location: San Francisco, California
• Founding Date: 2008
• Value Proposition: SmartBiz Loans promises their customers of a "fast, easy and secure lending process for the best deals at rates as low as 6.75%-9.00%," for loans up to $5 million and a long repayment term of 10-25 years.
• They assure customers of matching them with a lender who is most likely to fund their loans.
• Target Market: SmartBiz Loans targets small businesses looking to purchase equipment, purchase a new property, hire new employees, expand their workspace, increase working capital, or strengthen an existing loan.
• Funding Amount: $1.2 billion 

SMALL BUSINESS LENDING IN THE U.S.

• In 2018, the Office of Advocacy for the U.S. Small Business Administration published an analysis of the 2016 state of the U.S. small business lending sector (which is the most recently available report).
• According to the report, all reporting lending institutions (banks and depository lending institutions) in the U.S. lent $614 billion in 2016, with 26.07 million loans processed.
• The total small business lending in 2016 increased by 2.5% from $599 billion in 2015.
• A report by PRNewswire hints that online small business lending platforms such as OnDeck, Kabbage, and Lendio have lent nearly $10 billion to small businesses in the U.S. from 2015 to 2018.
• Furthermore, the report opines that these platforms have generated $37.7 billion in gross output, created 358,911 jobs, and $12.6 billion in wages between this period.
•  42% of small business loans processed by online small business lenders were between $10,000 and $50,000.
• The average amount of small business loans was $55,498. 

RESEARCH STRATEGY

1. INVOLVEMENT OF TECHNOLOGY COMPANIES

• Technology companies are increasingly getting involved in the small-business lending industry which has been dominated for a long time by established banks like Bank of America and JP Morgan Chase.
• In 2017, 24% of small businesses in the U.S. applied for credit online, a 3% increase from 21% in 2016; and online lenders accounted for over $6 billion in small business loans. In addition, 60% of new applications made by small business owners on Biz2Credit.com happen via mobile devices mostly outside traditional bankers' hours, during weekends or at night.
•  Research has also shown that small businesses have a higher chance of their loans being approved by online lenders (75%) as compared to large banks (56%). This is because non bank lenders make loans to lower-quality borrowers.  
• As a result of this tech company involvement, more small businesses are able to access loans in an easier and faster way, with funds being received "as soon as the next business day."
• Examples of companies involved in this trend include Amazon, PayPal, Fundbox, Taulia and Square.

2. INCREASED CONVERGENCE BETWEEN TRADITIONAL LENDERS AND NEW FINTECH DISRUPTORS

• Traditional lenders such as banks and other mainstream lenders are "forming an unlikely pact" with new fintech disruptors, as the two benefit from each other's strengths and disrupt the small business lending industry in the process.
• While traditional lenders have large databases of custom loan products and user data, fintech firms use the latest technologies such as AI-powered decision-making to improve the lending process and overhaul the conservative, slow and inefficient methods used by traditional lenders to review and approve loans.
• The combination of these strengths is leading to the emergence of a new era of small business lending, and small businesses stand to gain benefits from a better funding environment, quicker loan approvals and more access.
• An example of companies involved in this trend is SoFi, an online lender which joined forces with Fannie Mae, "one of the biggest mortgage lenders in the U.S." Their union provided benefits for both of them as improved Fannie Mae's debt refinancing process was improved and SoFi's customer base increased significantly.

3. AN INCREASE IN SCAMS DUE TO ONLINE LENDING

• While the growth in online lending makes it easier for small business owners to receive funding, it has also led to more scams arising on the internet and other channels.
• According to a survey by the BBB and the Fair Trade Commission, 67% of small businesses have said that lending scams have increased in the past three years. In 2016, marketplace scams accounted for $50 billion in monetary losses across the nation. It has also been difficult for small businesses to avoid scams because scammers pose as trusted bankers or brands.
• There are several types of scams including advance fee scams, peer lending scams, funding kit scams and ghost investors, among others and small businesses are finding that they have to do due diligence on loan providers before applying for loans.
• Examples of platforms that have been used for online lending scams include Craigslist, Facebook and Reddit.