Lendified And The SMB/Millennial Connection

It takes money to make money, the saying goes. So it is with the extension of credit to smaller firms who need the funds to gain top-line traction.

Lendified, which offers loans to small Canadian businesses online, said earlier this month that it has secured a $20 million credit facility through Liquid Capital. In addition, the company also announced $4 million in mezzanine financing, bringing the latest tally this month to a total of $24 million.

In an interview with PYMNTS, Lendified Founder and CEO Troy Wright said that, with the funding in hand, the overall mission is to put that money back to work in what he said remains the company’s traditional market of “loans between $5,000 and $150,000, with mainstream and Main Street businesses,” such as brick-and-mortar stores with direct sales and service providers, such as accounting firms and manufacturers, with a presence within Canada, who may wish, for example, to spread beyond Canada into new markets but must grow operations in order to do so.

The CEO told PYMNTS that the $20 million credit pact will be earmarked for direct lending and that there is a “multiplier effect” that would come as that money is moved into the economy — enough so that more than $60 million in final funding may result, which could help create new businesses and jobs. The original $20 million, given Lendified’s completed loan volumes and run rates seen in the past, would take between four and six months to make its way into the hands of SMB owners in order to fund inventory purchases, hire staff and cover expenses.

The remaining $4 million, stated the executive, is to be used to expand Lendified itself, with emphasis on data and analytics, in the same vein as the company’s acquisition of Mentio Technologies, a firm specializing in cash flow forecasting, earlier this year. The goal, said Wright, is to make sure that the adjudication of loans draws on sources such as deep web searches, various forms of media and legal sources as well.

Lendified will also look to expand geographically, said Wright, into the United States within the third or fourth quarter of this year, a timeframe that will also see a launch into the United Kingdom.

While Lendified’s average SMB applicant within Canada tends to have revenues of $750,000 annually and has been in business for between three and five years, one trend that shows up in demographics, said Wright, involves an increasing number of millennial business owners looking for loans in an effort to get their businesses up and running. Tech-savvy as you might expect, these millennials find ease of use with online lending platforms and “always-on” availability; SMB lending overall is suited to such alternative offerings, said Wright, rather than at traditional financial firms, due to complexity in gauging risk with limited operating history (and where personal credit has been used as a determinant of commercial lending worthiness).