Commercial lending is on the rise, but don’t tell that to SMBs who still find it hard to get a loan from a bank, says James Mendelsohn, Chief Marketing Officer at CAN Capital. In a recent interview with PYMNTS, Mendelsohn explained how the lack of understanding among SMBs on where and how they can access alternative sources for funding, holds back their growth. It also provided the inspiration for CAN Capital’s new alternative lending platform.
Commercial lending is on the rise, yet small businesses continue to have a hard time obtaining working capital. How is CAN Capital prepared to address these lending challenges?
JM: What we see at CAN Capital is the difficulty that small businesses continue to have accessing capital through traditional processes. Banks have come back into the space, but it’s still extraordinarily difficult for these businesses to get money.
Alternative lending providers in the SMB space like CAN Capital provide very valuable services, but there’s still a lack of understanding among SMBs on how they can access an alternative source for their funding needs.
So, that was a bit of the inspiration for CAN Connect – we wanted to make that access faster and easier for SMBs. By partnering with providers of SMB credit, we can give those providers ways to facilitate access to capital to all of their SMB customers out there.
From your perspective, what are some of the most significant changes in the lending market this year and what changes are you anticipating for the near future?
JM: One of the big changes is around technology. As technology improves and the availability of different forms of data improve, the result is you can do a lot in lending. At CAN Capital, we’ve been using a variety of forms of data – whether it’s transactional, third-party, etc. to change up the economics of SMB lending. We like to say that we’ve been using “Big Data” before the term was coined.
What it means for our customers is that we can bring a broader set of lending options to them when they’re seeking working capital. With CAN Connect, what we’ve done is help tap into that flow of data. If it’s a small business provider of capital that has access to any form of behavior or transaction patterns with SMBs, we actually help tailor offers and get more customized solutions to SMBs for their funding needs.
I think one of the other changes in SMB lending is increasing awareness of the alternative options in this category. More SMBs are seeking working capital, there are more providers competing in the space, and all of that is good news. It creates more access to capital for SMBs, which is part of the real growth of the overall category and the overall economy.
How is CAN Connect different from other offerings?
JM: CAN Connect is an interlocking suite of APIs. It has a lot of different benefits in the payment space. The overarching benefit is flexibility – because it’s a suite of APIs that work together, it can be customized so that the process between the provider of capital and its customers can work in the best way possible.
For instance, a service provider could pass non-PII data that they have about a merchant through the API. One of the APIs is called Instant Quote – we can provide a high confidence quote back to that customer of what that merchant would qualify for based on the data we have available. It’s a very compelling way for a service provider in payments to give their customers access to working capital.
It’s also quite seamless. Behind the scenes, the SMB is seeing the offer in the context of the provider’s marketing space, which is another benefit of integration. It creates a real one-stop shop for the customer.
Can any company that has small business customers use CAN Connect? What are some of its tangible benefits?
JM: Absolutely – it’s highly customizable, so any company or third-party service provider that works with SMBs and collects data can use it. If you’re a payment processor, and you have data on transaction speed or velocity, that’s data that can be used. If you sell inventory or accounting systems, similarly, you can integrate using CAN Connect back to our engine and provide offers for working capital directly to your customers.
There are really two different very tangible benefits. One is that it’s a tremendous value-add to the customer base. In a world where everyone is trying to find ways to create stickier relationships and more loyalty, offering a value-add to the customer base, like what you can do with CAN Connect, is a huge benefit and ties the customer directly to the service provider. If we’re able to leverage information that the provider has from the customer, we’re creating a tighter loop of loyalty between the two. I think that’s a tremendous benefit.
Finally, looking ahead, what are some of the projects you are working on, and what is their potential impact in the payments space?
JM: We have a history of innovation in the technology space, so we’re always looking for new ways to continue to develop both our technology offerings and our new products. One thing we’re working on is tailoring our product for online businesses. We haven’t had a specific product or technology for online sellers in the past, and we think that’s something we can bring to market.
We’re also designing some innovations around startup businesses and particularly businesses with rapid growth, where capital becomes part of the fuel for the early stages of their development.
Another thing that we think will be really key is mobile. We’re working on innovations there both for acquisition and ongoing account management that will be ready for release in early 2015.
Chief Marketing Officer, CAN Capital
Mr. Mendelsohn is a 20-year executive with deep experience in financial and consumer marketing. Most recently, he was at the consulting firm McKinsey & Company, where he advised global clients in the financial services sector on marketing analytics, market intelligence, digital strategy, and customer experience.
Prior to McKinsey, Mendelsohn spent 12 years at Capital One, where he most recently served as the Vice President of Corporate Strategy and led marketing, digital, and customer experience strategy across the credit card, banking, and financial services lines of business. He helped launch many of Capital One’s signature marketing programs, including the award-winning “What’s In Your Wallet?” advertising campaign and the Capital One Bowl.