Lyft is replacing taxis. Airbnb is taking on hotels. Opendoor is closing in on the real estate industry. Each of these disruptors is turning their market inside out with a new business model. And now there are disruptors in the business loan marketplace. That’s good news for small businesses looking for additional sources of capital. Take a look at what this might mean for you.
The New Players in Business Loans For 2018
CNBC recently reported that Google and Amazon are poised to enter the small business lending arena in a big way. In addition, TechCrunch revealed that Intuit’s QuickBooks users can apply to get small business loans now. These tech giants have the potential to disrupt the market and provide serious competition for traditional lenders.
In 2016, Amazon made more that $1 billion in loans to over 20,000 small businesses. The loans were granted on an invitation-only basis to top performers that sell on Amazon.
Loan amounts range from $1,000 to $750,000 at interest rates between 6 percent and 14 percent. The terms are between four and six months. Repayment is a fixed monthly amount that Amazon deducts from the seller’s account.
Amazon targets their loans for inventory financing. Small businesses use the loan to expand their inventory or discount items sold on its site.
Google and Lending Club
In 2015, Google and Lending Club announced a pilot program. Lending Club provides access to credit. Google purchases the loans to invest in their network of more than 10,000 partners, including resellers.
Businesses who receive the loan get access to low-interest, no-fee financing. Unlike Amazon loans, these can be used for business development and growth opportunities.
Eligible partners can obtain two-year loans of up to $600,000, although the average is $35,000. Only interest is due in the first year, helping businesses to meet the cash-flow needs of a growth initiative.
Intuit QuickBooks Capital
Intuit formed QuickBooks Capital to enable users of its QuickBooks product to get small business loans. The loans are for up to $35,000 with terms up to six months. Current rates range from 1.57 to 4.74 percent. Funds can be used for a variety of purposes including expansion.
QuickBooks Capital is able to use their 26 billion data points to predict a company’s future cash flow and their ability to pay back the loan. With information from the business’ QuickBooks data and from comparable businesses, they can make more informed loan decisions—even for businesses that have only been around for six months.
Small businesses can apply for the loan within their QuickBooks software. The online application takes only a few minutes. Decisions are rendered in 2-3 business days. The offer includes the APR and a detailed explanation of the monthly payments. Most loans are funded in two days.
Access to capital is important to small businesses. It can help you take advantage of market opportunities or boost your plans to expand. The entrance of three disruptors may open up new funding possibilities for entrepreneurs who want to grow their small business.