[nwarshaw]

A non profit has entered the Alternative Lending space. Using the Alternative Lending model to allow small business with fast access to capital, while lowering the cost of borrowing for the small business.

http://www.businessweek.com/articles...-lenders-lunch

I think this makes for a very interesting approach. I do not think they take over the entire market by any means, but I do think in certain areas this may mean that current Alternative Lenders have their current base of business at risk, and renewals in the Alternative lending area is what keeps the lenders alive.

That being said, what do you think?

[Sean Cash]

A non profit has entered the Alternative Lending space. Using the Alternative Lending model to allow small business with fast access to capital, while lowering the cost of borrowing for the small business.

http://www.businessweek.com/articles...-lenders-lunch

I think this makes for a very interesting approach. I do not think they take over the entire market by any means, but I do think in certain areas this may mean that current Alternative Lenders have their current base of business at risk, and renewals in the Alternative lending area is what keeps the lenders alive.

That being said, what do you think?

"Since 2010, he’s underwritten 250 EasyPay loans for about $5 million, at an average APR of less than 15 percent."

250 deals in 4 years. This is the very reason the wider small business market is not able to access credit. They're funding about 5 businesses a month on average, about the equivalent of a single newbie account rep.

It's great for the very few small businesses they've helped but does nothing to address the wider issue.

[nwarshaw]

agreed
My fear for a lender though is that they pull the ucc list in CA and begin this new campaign and over time no renewals for x company in CA, which would still hurt, if they found a way to pick up the pace there

[jbrown]

Non-profit lenders are in the market until loss rates make eat away all their "donated" capital. This group can do this on a very small scale because they know each borrower and can manage their risk. Addressing the wider market and their fund will quickly disappear from losses.

[nwarshaw]

Agreed, but in CA, could they educate merchants about rate, pick off renewals from you, and stay afloat in that market alone. Not addressing the wider problem, but hurting a funder or two in CA, which is a large and strong state?
Not sure, but will be interesting to watch at least

[JayBallentine]

Non-profit lenders are in the market until loss rates make eat away all their "donated" capital. This group can do this on a very small scale because they know each borrower and can manage their risk. Addressing the wider market and their fund will quickly disappear from losses.

This model is going to work for well capitalized FOR PROFIT lenders who aim to cherry pick the best customers so as to offer them renewals at 12-18 month turns on low 1.2x factor rates.

If a guy hasn't missed a payment and his business has grown or is staying steady - it then becomes challenging for funders to renew at 1.3x on 3-6 month turns.

I surmise that as brokers miss renewal opptys with these customers, inasmuch as half of the deal flow comes from brokers, it will be a challenge to retain brokers. Additionally, funders rely on renewal opptys the same way brokers do. How will losing high performing customer after high performing customer affect their businesses?

This is not a "what if" scenario. It is an incontrovertible fact that the pilgrims are in fact coming. Get out your good dishes like its Thanksgiving.

[CASHCASH]

"Since 2010, he’s underwritten 250 EasyPay loans for about $5 million, at an average APR of less than 15 percent."

250 deals in 4 years. This is the very reason the wider small business market is not able to access credit. They're funding about 5 businesses a month on average, about the equivalent of a single newbie account rep.

It's great for the very few small businesses they've helped but does nothing to address the wider issue.

This is the key item here, that figure is staggeringly low for a company that purports to be making waves in the industry.

Also found it interesting that in the article's example they mention it took ten days to get funded; I know that is still less time than an SBA but compared to other funders in this space that is a significantly long amount of time. When someone needs cash now, an extra 6 or 7 days can make all the difference in the world.