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Small Business Loans: BoeFly and Biz2Credit
Since the banks seemed to stop lending small business loans, life's got a little tougher for small businesses who need to borrow. But banks aren't the only places that you can raise capital to invest in your business, whether you're looking for small business loans to keep you going, to grow your business or even to start a new business.
The power of the Internet has enabled new lending solutions to be put in place, specifically, marketplaces where private lenders and small business borrowers can get together - and both can benefit.
For savers, interest rates are low, they're looking to diversify their portfolio, to gain a little extra interest over what the banks are offering.
For borrowers, they're having the door slammed in their face by the big banks, but their idea's are viable, their business is sound, they just need a small business loan.
Two such companies that have set up operations are boefly and biz2invest, but there will be others soon enough.
BoeFly was set up over six years ago, but only recently adopted new search technology that has catapaulted their service into the limelight with today's small business loans shortage. Their aim is to make it simpler to find and secure small business loans. It's like an eBay where one person is offering their money, and the other person is looking for that money - and BoeFly enables the two to search and find each other and agree terms easily.
Maybe you've come across them before, under their old names of GovGex.com and the Small Business Loan Exchange and just hadn't realised there was a name change.
In the first six months since the new small business loans matching software was unveiled, they've done over $100million in loans business, matching those who need with those who want easily.
But BoeFly goes further than this and enables the opportunity of selling the government-guaranteed portion of their loans on the secondary market to investors and Small Business Administration (SBA) loan pool assemblers. This has the effect of freeing up some liquidity to enable even more small business lending.
The most exciting bit about the way they enable this is the BoeFly site’s dynamic compatibility technology - meaning you can search on your criteria to be matched with somebody. So it works like a dating website, or ebay, would do. Clever matching by criteria of wants and needs.
Behind BoeFly is a group of small business lending experts possessing extensive banking and secondary market experience. BoeFly is a privately company, based in New York City.
Biz2Credit, first opened its doors in 2007 works slightly differently. They recommend lenders and brokers use its "Network Plan" for a monthly fee - and further charges a transaction fee on closed loans.
Biz2Credit handle about 2,000 loan applications per month at the moment.
One thing is for sure, with these new small business loans options opening up in the marketplace - and continually making borrowing for small businesses more accessible, things can only get better for those who have solid business plans, but for no fault of their own are being rejected by High Street Banks.
Borro lends money to small businesses against valuable personal assets, operating like a pawnbroker.
How Biz2Credit Works
As an applicant for a small business loan, you'd see a list of lenders.
The lenders are ranked, ranking being based on the probability of the loan closing as well as how well their loan product might suit what you are trying to borrow money for.
As a borrower, you can review details such as the interest rate, how long the loan takes to process, how much documentation the lender would require. This means you can shortlist potential lenders quickly and only contact those which seem the best fit for your needs.
UPDATE: In early 2013 Biz2Credit partnerd with Borro - Borro lends money to small businesses against valuable personal assets.
How BoeFly Works
With BoeFly, the lender sees a list of applications that have been submitted, with accompanying details such as the amount of loan required and which state the business is located in.
BoeFly is not available in all countries, so you will need to be US-based.
The BoeFly system then generates a compatibility score against each loan application, showing the lender how good a match the potential borrower is against what the lender is looking for.
Both these schemes significantly speed up the approach and decision making process. For small business owners, being able to access small business loans in a much quicker and easier way has to be the way forward.
It's got all the hallmarks of becoming the most popular way of raising capital and small business loans in the future.