Off The Continent And Into Puerto Rico For Online SMB Lending

For small businesses, expansion is key, and expansion needs capital.

For small business lenders and for FinTech too, expansion is key; but for Biz2Credit, expansion is literal.

In a partnership formed recently with Puerto Rico’s Oriental Bank, Biz2Credit said late last month that it has begun offering its digital lending platform to the bank’s commercial clients. The company has said that it is the first bank in Puerto Rico to offer digital services, ranging from business credit cards to working capital loans to SBA loans.

In an interview with PYMNTS, Rohit Arora, chief executive officer of Biz2Credit, stated that the digital platform and online lending applications are conducive to a mobile-centric interaction between Oriental Bank and smaller businesses.

The focus, he said, “has been on offering an end-to-end digital process” with loan applications, from initial interaction to scorecard to approval and underwriting. The movement to digital, he said, helps avoid the costs of beefing up efforts in physical branches nationwide to draw in customers for face-to-face meetings.  Through cloud-based processing, applicants upload their documents electronically, and, similarly, commitment letters and closing documents (along with disbursement of loans via Oriental) are done electronically as well.

In addition, said Arora, whose firm has arranged for $1.7 billion in small business financing across the last decade, customer applications are offered in both Spanish and English. The dual language option is a nod to the bilingual culture extant in Puerto Rico, he continued, but also allows Biz2Credit to springboard that platform to other multi-lingual regions, such as Florida and California in the United States, along with, eventually (and longer term), as a gateway into Latin America.

For Oriental, he said, the move to embrace digital lending is a strategic one, where in a marketplace with four large traditional lenders (via banks), market share is important. That is a different business dynamic than might be seen in the United States, said the executive, where there are thousands of financial institutions in an environment that he termed as “still very fragmented.”

Drilling down a bit into the Puerto Rico market in particular, Arora noted some differences between small business lending versus, say, the United States.

Verticals within the SMB realm that may be receptive to online lending, he said, include manufacturing and retail. Loan size tends to reflect the smaller size of the businesses in Puerto Rico, said Arora, with $250,000 for Puerto Rico vs. $500,000 in the United States, with terms of three to five years. “Working capital is key,” he told PYMNTS, and typically can be used to fund equipment and other items that are geared toward expansion. Though the regulatory climate is not that different, said Arora, the fact that Oriental is the first bank to come to market with digital lending with any size speaks to a tough economic climate that may have kept demand dormant — yet the picture is improving.

Smaller firms in Puerto Rico, he said, have yet to fully embrace other loan and capital conduits, such as corporate credit cards, where perhaps more education is a way to bring smaller firms to adopt those instruments in wider force. The advantage of small business lending done digitally — available when traditional lending might not be — remains, said Arora.

The two companies are coming to market with an emphasis on technology — specifically mobile — to bring SMBs to online lending. He noted that Biz2Credit’s own site and platform are geared toward mobile, with interfaces and processes in place that are more intuitive than might be seen with a desktop setting.

The company has said in the past that in the U.S., 37 percent of its applications are initiated during timeframes surrounding typical business hours. Throw weekends in, he told PYMNTS, and that tally shoots to 52 percent, testament to the appeal of doing transactions over mobile.