In a sign that small business lending may be well on its way to moving beyond the traditional conduits of big banks and other larger financial players, online platform Lendio, which helps smaller companies find access to capital, reported heady growth for 2015.
The company said Wednesday (Feb. 24) that its revenues were up more than 100 percent year over year, with one figure posting growth of more than 1,000 percent — 1,175 percent to be exact — as the company facilitated more than $128 million in funding last year.
That funding was wide-ranging in terms of geographic reach, with 5,100 business owners capturing financing in all 50 U.S. states. By way of contrast, the company helped more than 400 business owners in 2014 secure $12.4 million in funding.
In an interview with MPD CEO Karen Webster, Brock Blake, chief executive officer and cofounder of the company, said that one key driver behind the firm’s growth has been the fact that “small business owners are starting to realize that they have many options at their fingertips” and have become aware of alternative funding sources, beyond the banks they may have traditionally approached and which have been less than willing to lend. However, continued Blake, the typical small business owner “may have other things on their plate” and may not have time to seek out the best fit for their needs.
As a result, said Blake, the initial reaction may be to assume that the banks or credit unions with whom they have had dealings in the past may be the ones to offer the only rates available. Yet, increasingly, said Blake, “nowadays, they are starting to hear about all these other alternative lenders, such as public companies, like OnDeck or Lending Club,” which are among the 75 lenders featured in Lendio’s network.
Drilling a bit down into the numbers, Blake said that the typical Lendio client has been in business for about 26 months and, with revenues of roughly $50,000 monthly, has been in pursuit of capital to do everything from expanding operations and hiring staff to funding marketing efforts.
The typical industries best represented span retail, restaurants and construction. The typical loan size granted (after coming back through the Lendio engine, with quotes from several would-be lenders) has been around $25,000. In addition, Blake told Webster that more than 60 percent of customers return to Lendio as repeat customers, as they build up creditworthiness, with the ability to tap larger funding needs at ever better rates.