Alternative financers are often crucial to the success of small businesses, and their services are becoming more technologically savvy. One of these alternative lenders is FundThrough.
FundThrough, based in Canada, launched operations in the nation last Monday (Feb. 23) after announcing a $2.2 million funding round, reports said. The company’s most attractive selling point for small businesses is its platform: SME owners can access working capital from FundThrough by simply tapping a button on their smartphone.
“Small businesses can’t get access to the capital they need to grow from banks,” FundThrough CEO and co-founder Steven Uster said. “By using technology, we can make it convenient for small business to get the capital they need. They can access capital with one tap on their iPhone; it’s that easy.
Offering small business financing through a smartphone is an innovative strategy, but the company’s methods for determining which businesses will be granted a loan are similarly progressive. The company reportedly has a list of criteria businesses need to meet to be approved. When researching these firms, FundThrough looks at the company’s customers and open invoices to determine how much those customers will pay and have already paid.
Companies submit open invoices to FundThrough, meaning the lender receives a snapshot of SMEs’ current cash flow. Once those invoices have been uploaded to FundThrough, Uster said loan approvals can be granted in only a matter of seconds.
This process, Uster added, means FundThrough is not relying on these small businesses to pay back the loans, but is relying on the customers of those businesses. “We’re bridging that gap so you can have money today and when invoices are paid, then we get paid back,” he said.
For lenders, assuring that your borrower can pay back the cash is crucial, especially as a recent report found that small business borrowers in Canada are more frequently failing to pay back their loans and more invoices are turning delinquent.