Analysis Featured

Bridging the Gap Between Banks and Small Business Lending

According to the Small Business American Dream Gap Report, almost 25% of all small businesses consider shutting down due to cashflow issues. With a reported 30 million SMBs in the United States, 7.5 million SMBs are at risk. Traditional banks literally vacated the SMB lending space after the 2008-09 financial crisis. Moreover, changes in minimum wage and competition from automation, Amazon, and cash burning startups have disrupted the SMB ecosystem. SmartBiz Loans understands the pain point of the market and was launched to help minimize this funding gap.

About SmartBiz Loans

Set up in 2010 by Ryan Gilbert and Sean O’Malley, SmartBiz Loans was incubated through PayPal and Venrock.

The company started as a consumer credit delivery platform and later pivoted towards small businesses. The San Francisco-based startup has raised more than $40 million in funding from a list of marquee investors including its original incubators.

Currently headed by Evan Singer, SmartBiz Loans has been the pioneer in creating the leading online marketplace for SBA loans. It partners with banks across the country and establishes a win-win situation for both small businesses and lenders by ensuring that the “tedious” process of loan application becomes as intuitive and hassle-free as possible.

What SmartBiz Loans Can Do for SMBs

Businesses across the nation struggle to meet their day-to-day requirements for working capital and maintaining optimum cash flow. SmartBiz Loans in it’s new SmartBiz Advisor(TM) product to give small businesses insights Loans bridges the gap between the bankers and the borrowers by avoiding unnecessary loan application rejections by banks. The startup uses artificial intelligence in it’s new SmartBiz Advisor product to give small businesses insights into what happens during the credit decisioning process. It helps entrepreneurs understand why SBA loan applications are rejected so that borrowers can mitigate the chances of loan application rejection. Also, SmartBiz focuses on reducing unnecessary delays in the loan application process.

SmartBiz Lending Products

SmartBiz specializes in SBA loans for working capital, refinancing, and SBA 7(a) commercial real estate loans.

SBA loans are considered the gold standard in the industry due to their lower interest rates and longer tenures. The company’s average loans range from $30,000 to $5 million, tenure ranges up to 10-25 years for different products, and APR ranges form 6%-8.25%.

Another feather in SmartBiz Loans’ cap is it’s new education online tool called SmartBiz Advisor that is offered at no cost to small business owners. This AI-based product is an amalgamation of all SmartBiz’s capabilities and helps businesses find out how bankers view them as a potential borrower for an SBA or bank loan while helping the business take the necessary steps to ensure SBA loan approval. From viewing the tax returns of businesses to providing them with a proprietary credit score to performing debt analysis, SmartBiz Loans recommends ways to help them assess how likely they are to qualify for a bank or SBA loan and recommends ways clients can improve their financial health..

Working the SmartBiz SBA Loan System

The SmartBiz SBA Loan system is designed to be intuitive and simple. It uses evaluates a borrower’s score by using AI and machine learning technology to ensure the borrower is an ideal fit for an SBA loan. Then the right borrower is directed to the right bank. On the other hand, SmartBiz Loans partners with banks and licenses its software to help them in automatic loan underwriting. Most impressive is the fact that almost 90% of borrowers referred by SmartBiz Loans are approved for bank loans. Such a high acceptance rate reduces the cost of client acquisition for banks and improves the overall borrower experience.

Dealing with Competition

According to Singer, SmartBiz Advisor  is the AI-powered chief financial officer for small businesses that find it hard to hire their own CFOs. Although SmartBiz faces aggressive competition in the industry, its pace of growth, proprietary artificial intelligence and machine learning technology, and access to in-house databases, including tax data, have helped it create its own alternative lending niche.

SmartBiz Loans recently crossed originations of $500 million in funded SBA loans. It was the biggest facilitator for funding of SBA 7(a) loans in the year 2016, and it overtook JPMorgan Chase as the leading provider of SBA 7(a) loans.

Diversity of Customers

SmartBiz Loans caters to a broad customer base across 50 states. Most of the borrowers that approach the lender have been in business for 5-10 years, work with less than 10 employees, and their average annual revenue ranges between $500,000 to $2 million.

SmartBiz Loans has helped reduce the underlying gender bias in SMB funding by originating almost 17% of its SBA loans to women-owned small businesses. Also, SBA loans for veterans account for 8% of its total originations.

SmartBiz Loans and the Future of SBA(7a) Lending

Apart from boosting its other products, SmartBiz plans to delve deep into SmartBiz Advisor in order to streamline the process of making SBA credit easily available for small businesses. Though currently serving the United States, it is also looking to expand abroad in the coming years.

Creating the ideal marketplace for SBA Loans, SmartBiz Loans is the number one online marketplace for SBA 7(a) loans. Its deep domain expertise coupled with its customer service obsession make its an easy bet for future unicorn status.

small business lending


Written by Heena Dhir.


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