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Small Business Administration

From Wikipedia, the free encyclopedia

Small Business Administration

Seal of the United States Small Business Administration.svg

Seal of the SBA

US-SmallBusinessAdmin-Logo.svg

Logo of the SBA

Agency overview

Formed July 30, 1953

Preceding agency

Small Defense Plants Administration, Reconstruction Finance Corporation

Jurisdiction Federal government of the United States

Headquarters 409 Third Street, SW, Washington, D.C.

Employees 3,293 (2015)[1]

Annual budget $710 million USD (2015)[2]

Agency executives

Linda McMahon, Administrator

Althea Coetzee, Deputy Administrator

Website sba.gov

The Small Business Administration (SBA) is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters". The agency's activities are summarized as the "3 Cs" of capital, contracts and counseling.[3]

SBA loans are made through banks, credit unions and other lenders who partner with the SBA. The SBA provides a government-backed guarantee on part of the loan. Under the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to provide up to a 90 percent guarantee in order to strengthen access to capital for small businesses after credit froze in 2008. The agency had record lending volumes in late 2010.[4]

SBA helps lead the federal government's efforts to deliver 23 percent of prime federal contracts to small businesses. Small business contracting programs include efforts to ensure that certain federal contracts reach woman-owned and service-disabled veteran-owned small businesses as well as businesses participating in programs such as 8(a) and HUBZone.[5]

SBA has at least one office in each U.S. state. In addition, the agency provides grants to support counseling partners, including approximately 900 Small Business Development Centers (often located at colleges and universities), 110 Women's Business Centers, and SCORE, a volunteer mentor corps of retired and experienced business leaders with approximately 350 chapters. These counseling services provide services to over 1 million entrepreneurs and small business owners annually. President Obama announced in January 2012 that he would elevate the SBA into the Cabinet, a position it last held during the Clinton administration,[6] thus making the Administrator of the Small Business Administration a cabinet-level position.

Contents [hide]

1 History

2 Organizational structure

3 Lending programs

3.1 Loan Guarantee Program

3.2 504 Fixed Asset Financing Program

3.3 MicroLoan Program

3.4 Disaster Loan Program

4 Entrepreneurial development programs

4.1 Small Business Development Centers

4.2 Women's Business Centers

4.3 Service Corps of Retired Executives (SCORE)

4.4 Veteran Business Outreach Centers (VBOC)

4.5 Innovation and Strategic Initiatives

5 Federal contracting and business development programs

5.1 8(a) Business Development Program

5.2 HUBZone

6 SBA loan industry

7 Small Business Investment Companies

8 Criticism

9 See also

10 References

11 External links

History[edit]

The SBA was created on July 30, 1953, by President Eisenhower with the signing of the Small Business Act, currently codified at 15 U.S.C. ch. 14A. The Small Business Act was originally enacted as the "Small Business Act of 1953" in Title II (67 Stat. 232) of Pub.L. 83–163 (ch. 282, 67 Stat. 230, July 30, 1953); The "Reconstruction Finance Corporation Liquidation Act" was Title I, which abolished the Reconstruction Finance Corporation (RFC). The Small Business Act Amendments of 1958 (Pub.L. 85–536, 72 Stat. 384, enacted July 18, 1958) withdrew Title II as part of that act and made it a separate act to be known as the "Small Business Act". Its function was and is to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns".

The SBA has survived a number of threats to its existence. In 1996, the Republican-controlled House of Representatives planned to eliminate the agency.[7] It survived and went on to receive a record high budget in 2000.[8] Renewed efforts by the Bush Administration to end the SBA loan program met congressional resistance, although the SBA's budget was repeatedly cut, and in 2004 certain expenditures were frozen. The Obama Administration has supported the SBA budget. Significant supplemental appropriations for the agency strengthened SBA lending through the American Recovery and Reinvestment Act of 2009 and the Small Business Jobs Act of 2010.[9]

Organizational structure[edit]

The SBA has an Administrator and a Deputy Administrator. It has an associate administrator or director for the following offices:[10]

Business Development

Capital Access

Communications and Public Liaison

Congressional and Legislative Affairs

Credit Risk Management

Disaster Assistance

Entrepreneurial Development

Entrepreneurship Education

Equal Employment Opportunity and Civil Rights Compliance

Faith Based and Neighborhood Partnerships

Field Operations

Government Contracting and Business Development

Hearings and Appeals

HUBZone Program

International Trade

Investment and Innovation

Management and Administration

Native American Affairs

Performance Management

Small Business Development Centers

Veterans Business Development

Women's Business Ownership

Senate-confirmed appointees include: Administrator, Deputy Administrator, Chief Counsel for Advocacy, and Inspector General.

Lending programs[edit]

This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (February 2012) (Learn how and when to remove this template message)

The most visible elements of the SBA are the loan programs it administers. The SBA does not provide grants or direct loans with the exception of Disaster Relief Loans. Instead, the SBA guarantees against default certain portions of business loans made by banks and other lenders that conform to its guidelines.

The primary use of the programs is to make loans for longer repayment periods based in part upon looser underwriting criteria than normal commercial business loans, though these programs can enable owners with bad credit to receive a loan. A business can qualify for the loan even if the yearly payment approximates previous year's profit. Most banks want annual payment for loans no more than two-thirds (2/3) of prior year's operating profits. Lower payments, longer terms and loosened criteria allow some businesses to borrow more money than otherwise.

One of the most popular uses of SBA loans is commercial mortgages on buildings occupied or to be occupied by small business. These programs are beneficial to small business because most bank programs frequently require larger down payments and/or have repayment terms requiring borrowers refinance every five years. They can be beneficial to the bank in that banks can reduce risk by taking a first-lien position for a smaller percentage of the project, then arranging for a SBA Certified Development Company to finance the remainder through a second-lien position.

Loan Guarantee Program[edit]

The 7(a) Loan Guarantee Program is designed to help entrepreneurs start or expand their small businesses. The program makes capital available to small businesses through bank and non-bank lending institutions.[11] The Small Business Jobs Act of 2010 permanently increased the maximum size of these loans from $2 million to $5 million. if

504 Fixed Asset Financing Program[edit]

The 504 Fixed Asset Financing Program is administered through non-profit Certified Development Companies throughout the country. This program provides funding for the purchase or construction of real estate and/or the purchase of business equipment/machinery. Of the total project costs, a lender must provide 50% of the financing, a Certified Development Company provides up to 40% of the financing through a 100% SBA-guaranteed debenture, and the applicant provides approximately 10% of the financing. Thorough due diligence of properties purchased through this program is required. Specific SBA Level I Environmental Site Assessment guidelines apply as all properties are treated as "high risk." The Small Business Jobs Act permanently increased the maximum size of these loans from $2 million to $5 million ($5.5 million for manufacturers).

MicroLoan Program[edit]

The Small Business Jobs Act increased the maximum amount of SBA microloans from $35,000 to $50,000. These are offered through non-profit microloan financial intermediaries.

Disaster Loan Program[edit]

SBA opens Disaster Loan Center in Austell, GA, October 26, 2009

Homeowners and renters are eligible for long-term, low-interest loans to rebuild or repair a damaged property to pre-disaster condition.[12] Before making a loan, the SBA must establish the cost of repairing or rebuilding the structure (determined by SBA's Field Inspectors who visit the property), applicant's repayment ability (determined by applicant's creditworthiness and income) and whether the applicant can secure credit in the commercial market (called the credit elsewhere test). Applicants who do not qualify for disaster assistance loans are referred to the Federal Emergency Management Agency (FEMA) for grants. Although SBA won’t decline a loan for lack of collateral, the agency is statutorily required to collateralize whatever assets are available including the damaged property, a second home or other real estate.

Businesses are also eligible for long-term, low-interest loans to recover from declared disasters.[13] Similar to the homeowner's loan program mentioned above, small business owners pledge any available assets and acquire a similar pledge from a spouse or partner in the case of shared assets. If defaulting on the debt, the spouse or partner must surrender their value in the assets. The total value of an applicant’s assets is not considered by the SBA; therefore, a company may be approved for a loan regardless of whether that entity has little or substantial net worth.

Once an SBA loan is approved, the SBA mails closing documents to the applicant for signature. Disbursements include an initial unsecured amount of $25,000 (See latest fact sheet), and subsequent disbursements depending upon construction progress and continued insurance coverage. After final disbursement, the loan is transferred to one of the SBA's servicing offices for management, or to its collections office in the case of default.

Disaster Relief Loans are often approved within 21 days. However, after Hurricane Katrina the SBA processed applications, on average, in about 74 days.[14]

If a business with a Disaster Relief Loan defaults on the loan, and the business is closed, the SBA will pursue the business owner to liquidate all personal assets, to satisfy an outstanding balance. The IRS will withhold any tax refund expected by the former business owner and apply the amount toward the loan balance.

Entrepreneurial development programs[edit]

Small Business Development Centers[edit]

Approximately 900 Small Business Development Center sites are funded through a combination of state and SBA support in the form of matching grants. Typically, SBDCs are co-located at community colleges, state universities, and/or other entrepreneurial hubs. Cole Browne leads the SBA in purchasing of new Development Center sites.

Women's Business Centers[edit]

Women's Business Centers (WBCs) represent a national network of over 100 non-profit educational centers throughout the United States and its territories, funded in part through SBA support.[15] The maximum SBA grant for a WBC is $150,000 per year, although most centers receive less.[15] WBCs are required to provide non-federal matching funds of 50% of the grant in the first two years and 100% thereafter.

WBCs are designed to assist women in starting and growing small businesses, though their services are available to all.[16] WBCs help women succeed in business by providing training, mentoring, business development, and financing opportunities to over 100,000 women entrepreneurs annually across the nation.[15] Women’s Business Centers are mandated to serve a significant number of socially and economically disadvantaged individuals.[16]

Research conducted by the Association of Women’s Business Centers indicates that 64% of WBC clients in 2012 were low-income, 39% were persons of color, and 70% were nascent businesses.[17] WBC services are provided in more than 35 languages, with 64% of WBCs providing services in two or more languages. In addition to business training services, 68% of WBCs provide mentoring services, and 45% provide microloans.[17]

Service Corps of Retired Executives (SCORE)[edit]

SBA annually grants SCORE[18] the funds to oversee approximately 350 chapters volunteers who provide free mentoring and counseling to entrepreneurs and small business ownership.

Veteran Business Outreach Centers (VBOC)[edit]

SBA's Office of Veteran Business Development operates twenty[19] Veteran Business Outreach Centers[20] through grants and cooperative agreements with organizations which provide technical assistance to businesses owned by veterans and family members. VBOCs also provide instructors for the SBA's program Boots to Business.[21] Boots to Business is delivered in partnership with SBA’s Resource Partners, SCORE Mentors, Small Business Development Centers, Women’s Business Centers, and Veterans Business Outreach Centers and the Institute for Veterans and Military Families at Syracuse University. It is available free on participating installations to service members and their dependents transitioning or retiring from the U.S. military. Additional SBA resources for veterans are available from http://www.sba.gov/vets.

Innovation and Strategic Initiatives[edit]

The SBA also supports regional innovation clusters across the country.[22]

Federal contracting and business development programs[edit]

8(a) Business Development Program[edit]

The 8(a) Business Development Program assists in the development of small businesses owned and operated by individuals who are socially and economically disadvantaged, such as women and minorities. The following ethnic groups are classified as eligible: Black Americans; Hispanic Americans; Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal). In 2011, the SBA, along with the FBI and the IRS, uncovered a massive scheme to defraud this program. Civilian employees of the U.S. Army Corps of Engineers, working in concert with an employee of Alaska Native Corporation Eyak Technology LLC allegedly submitted fraudulent bills to the program, totaling over 20 million dollars, and kept the money for their own use.[23] It also alleged that the group planned to steer a further 780 million dollars towards their favored contractor.[24]

HUBZone[edit]

HUBZone is an SBA program for small companies that operate and employ people in Historically Underutilized Business Zones (HUBZones). The HUBZone program was created in response to the HUBZone Empowerment Act created by the US Congress in 1998.

SBA loan industry[edit]

The SBA loan industry can be divided into distinct categories:

Large bank institutions, such as Chase, Bank of America and Wells Fargo, generate the bulk of their SBA loan volume by loans, especially the express loan and line of credit, offered to those who would be declined for 'normal' bank credit due to factors such as length of time in business or slightly more conservative underwriting factors. Banks have sophisticated computer systems that generally make this process seamless, and are quite different from other financial institutions who utilize SBA lending for separate and distinct purposes.

SBA loans are used heavily by banks of all sizes to finance the purchase or construction of business owner-occupied real estate (i.e., real property purchased for commerce). Many banks offer SBA loans only for this purpose. In particular, they finance properties that a bank would consider too risky to finance conventionally, due to being of a special use [bowling alley, automobile repair] or environmentally risky nature [petroleum products storage, electrical substation] that can make their resale value limited. Some example properties include motels, gas stations and car washes.

SBA loans also encourage individuals to buy existing business. Since, unlike in real estate transactions, commercial lenders can fund referral fee earned by business brokers helping people buy and sell businesses, this segment of industry is supported by smaller banks and standalone finance companies who understand this sector.

Small Business Investment Companies[edit]

One of the first steps toward a professionally managed private equity and venture capital industry was the passage of the Small Business Investment Act of 1958. The 1958 Act officially allowed the SBA to license private "Small Business Investment Companies" (SBICs) to help with financing and managing small entrepreneurial businesses in the United States. Passage of the Act addressed concerns raised in a Federal Reserve Board report to Congress that concluded that a major gap existed in the capital markets for long-term funding for growth-oriented small businesses. Additionally, it was thought that fostering entrepreneurial companies would spur technological advances to compete with the Soviet Union. Facilitating the flow of capital through the economy up to the pioneering small concerns in order to stimulate the U.S. economy was and still is today the main goal of the SBIC program.[25] The passage of the Small Business Investment Act of 1958 by the federal government was an important incentive for would-be venture capital organizations.[citation needed] The act provided venture capital firms structured either as SBICs or Minority Enterprise Small Business Investment Companies (MESBICs) access to federal funds which could be leveraged at a ratio of up to 4:1 against privately raised investment funds. In 2005, in response to extensive losses incurred in connection with tech boom investments, the SBA decided to wind down its "Participating Securities" SBIC program, which had provided equity-like SBA backing for equity-oriented SBIC funds. The SBA's "Debenture" SBIC program, the original SBIC vehicle founded in 1958, continues to license and contribute capital to SBIC funds.[citation needed] The SBIC program had its highest ever year in Fiscal Year 2010.[26]

Criticism[edit]

The Cato Institute has challenged the justification of the federal government in intervening in credit markets.[27][28] Among other criticisms, Cato argues that "the SBA benefits a relatively tiny number of small businesses at the expense of the vast majority of small business that do not receive government assistance. SBA subsidies also represent a form of corporate welfare for the banking industry." Cato notes that the failure rate of all SBA loans from 2001 to 2010 is 19.4%,[27] contributing to a cost to taxpayers of $6.2 billion in 2011.[29]

In 2005, SBA Inspector General Report 5-15 stated, “One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”[30]

In October 2009, the Government Accountability Office released Report 10-108 which stated, "By failing to hold firms accountable, SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud."[31]

See also[edit]

Administrator of the Small Business Administration

Title 13 of the Code of Federal Regulations

References[edit]

Jump up ^ https://www.sba.gov/about-sba/sba-performance/performance-budget/congressional-budget-justificationannual-performance-reports. Missing or empty |title= (help)

Jump up ^ - "Small Business Administration Fiscal Year 2015 Congressional Budget Justification and Fiscal Year 2013 Annual Performance Report Fiscal Year 2015 Congressional Budget Justification and Fiscal Year 2013 Annual Performance Report" Check |url= value (help).

Jump up ^ "SBA Blog Post by Deputy Administrator Marie Johns".

Jump up ^ Atlanta Journal Constitution http://www.ajc.com/business/small-business-loans-soar-795135.html. Missing or empty |title= (help)

Jump up ^ "SBA News Release".

Jump up ^ Emily Maltby (13 January 2012). "Obama to Elevate SBA Chief". WSJ. Retrieved 9 May 2016.

Jump up ^ "Reducing the Deficit: Spending and Revenue Options, Section 9" (PDF). Congressional Budget Office. March 1997.

Jump up ^ "Small Business: Expectations of Firms in SBA's 8(a) Program Are Not Being Met". Government Accountability Office. July 20, 2000.

Jump up ^ "Office of Management and Budget, White House" (PDF).

Jump up ^ "Our People". Small Business Administration. Retrieved 19 November 2013.

Jump up ^ "New Rules Make SBA Loans Easier To Obtain".

Jump up ^ "SBA: Home and Personal Property Loans". Retrieved 23 July 2014.

Jump up ^ "SBA: Business Physical Disaster Loans". Retrieved 23 July 2014.

Jump up ^ GAO.gov

^ Jump up to: a b c "Women’s Business Centers: Effectively Growing Entrepreneurship". http://www.awbc.org. Association of Women's Business Centers. Retrieved 11 November 2014. External link in |website= (help)

^ Jump up to: a b "Women's Business Centers". http://www.sba.gov. Small Business Administration. Retrieved 11 November 2014. External link in |website= (help)

^ Jump up to: a b "Women’s Business Center Overview" (PDF). http://www.awbc.org. Association of Women's Business Centers. Retrieved 11 November 2014. External link in |website= (help)

Jump up ^ "SCORE in Action". SCORE Association. Retrieved 2012-06-19.

Jump up ^ https://www.sba.gov/offices/headquarters/ovbd/resources/1548576

Jump up ^ "Veterans Business Centers Receive Funding To Expand Entrepreneurship Outreach". https://www.sba.gov/offices/headquarters/ovbd/resources/362341. Small Business Administration. Retrieved 8 May 2015. External link in |website= (help)

Jump up ^ "Office of Veterans Business Development Resources". SBA. Retrieved 2015-05-08.

Jump up ^ "Clusters". Small Business Administration. Retrieved 6 May 2017.

Jump up ^ LibCasey, C-SPAN (4 October 2011). "EyakTek Director Arrested in Major Bribery Case". Alaska Public Media. Retrieved 9 May 2016.

Jump up ^ Press release, 10/4/201/ Ronald C. Machen Jr, U.S. Attorney for the District of Columbia, U.S. Department of Justice

Jump up ^ "SBA Offices and Resource Partners". Retrieved 9 May 2016.

Jump up ^ "SBA News Release" (PDF).

^ Jump up to: a b "Terminating the Small Business Administration". Cato Institute. August 2011. Retrieved 2012-08-23.

Jump up ^ Terminating the Small Business Administration - Reader Response | Cato @ Liberty. Cato.org (2012-08-22). Retrieved on 2013-08-12.

Jump up ^ Budget of the United States Government, Fiscal Year 2012. Washington: Government Printing Office. 2011. pp. 161–62.

Jump up ^ http://www.asbl.com/documents/05-15.pdf

Jump up ^ http://www.gao.gov/new.items/d10108.pdf

External links[edit]

Official website

SBA in the Federal Register

SBA History

8a Certification Faqs

Public Law 85-699, 85th Congress, S. 3651: Small Business Investment Act of 1958

Official SBA YouTube Channel

Categories: Small Business AdministrationFinancial regulatory authorities of the United StatesGovernment agencies established in 1953Organizations based in Washington, D.C.

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Small business financing

From Wikipedia, the free encyclopedia

This article needs more links to other articles to help integrate it into the encyclopedia. Please help improve this article by adding links that are relevant to the context within the existing text. (May 2014) (Learn how and when to remove this template message)

Small business financing (also referred to as startup financing or franchise financing) refers to the means by which an aspiring or current business owner obtains money to start a new small business, purchase an existing small business or bring money into an existing small business to finance current or future business activity. There are many ways to finance a new or existing business, each of which features its own benefits and limitations. In the wake of the financial crisis of 2007–08, the availability of traditional types of small business financing dramatically decreased.[1] At the same time, alternative types of small business financing have emerged. In this context, it is instructive to divide the types of small business financing into the two broad categories of traditional and alternative small business financing options.

Contents [hide]

1 Traditional small business financing options

2 Debt financing

3 Equity financing

4 Rollover retirement funds to start or finance a business

5 New sources of debt and equity financing

6 References

Traditional small business financing options[edit]

There have traditionally been two options available to aspiring or existing entrepreneurs looking to finance their small business or franchise: borrow funds (debt financing) or sell ownership interests in exchange for capital (equity financing).

Debt financing[edit]

The principal advantages of borrowing funds to finance a new or existing small business are typically that the lender will not have any say in how the business is managed and will not be entitled to any of the profits that the business generates. The disadvantages are the payments may be especially burdensome for businesses that are new or expanding.

Failure to make required loan payments will risk forfeiture of assets (including possibly personal assets of the business owners) that are pledged as security for the loan.

The credit approval process may result in some aspiring or existing business owners not qualifying for financing or only qualifying for high interest loans or loans that require the pledge of personal assets as collateral. In addition, the time required to obtain credit approval may be significant.

Excessive debt may overwhelm the business and ultimately risks bankruptcy. For example, a business that carries a heavy debt burden may face an increased risk of failure.[2]

The sources of debt financing may include conventional lenders (banks, credit unions, etc.), friends and family, Small Business Administration (SBA) loans, technology based lenders,[3][4][5] microlenders, home equity loans and personal credit cards. Small business owners in the US borrow, on average, $23,000 from friends and family to start their business.[6]

The duration of a business loan is variable and could range from one week to five or more years, and speed of access to funds will depend on the lender's internal processes. Private lenders are swift in turnaround times and can in many cases settle funds on the same day as the application, whereas traditional big banks can take weeks or months.

Equity financing[edit]

The principal practical advantage of selling an ownership interest to finance a new or existing small business is that the business may use the equity investment to run the business rather than making potentially burdensome loan payments. In addition, the business and the business owner(s) will typically not have to repay the investors in the event that the business loses money or ultimately fails. The disadvantages of equity financing include the following:

By selling an ownership interest, the entrepreneur will dilute his or her control over the business.

The investors are entitled to a share of the business profits.

The investors must be informed of significant business events and the entrepreneur must act in the best interests of the investors.

In certain circumstances, equity financing may require compliance with federal and state securities laws.

The sources of equity financing may include friends and family, angel investors, and venture capitalists.

Rollover retirement funds to start or finance a business[edit]

A lesser-known but well-established means for entrepreneurs to finance a new or existing business is to rollover their 401k, IRA or other retirement funds into their franchise or other business venture. This financing option is often called "Rollover as business startup" or "ROBS" financing. This isn't a loan: instead, the business owner forms a C Corporation, which sponsors a profit sharing retirement plan. From there, the business owner uses that company retirement plan to buy shares of his own company, thus contributing to the company's finances.[7]

This small business financing option allows the business owner to obtain the benefits of debt and equity financing while avoiding the disadvantages such as burdensome debt payments. More than 10,000 entrepreneurs have used their retirement funds to finance their start-up businesses.[8]

The IRS has clearly stated that the use of retirement funds to finance a small business is not “per se” non-compliant. ROBS financing is complicated, however, and the IRS has developed a set of guidelines for ROBS financing.[9] As such it is essential to employ experienced professionals to assist with this small business financing strategy.

New sources of debt and equity financing[edit]

In the wake of the decline of traditional small business financing, new sources of debt and equity financing have increased including Crowdfunding and Peer-to-peer lending. Unless small businesses have collateral and can prove revenue, banks are hesitant to lend money. Often times start up companies and businesses operating for less than a year do not have collateral and private money lenders or angel investors are a better option. Private money lenders and angel investors are willing to take more risk than banks recognizing the potential upside. Private lenders can also reach a decision faster with approvals only going through one tier rather than being overlooked by many levels of management.

References[edit]

Jump up ^ Cole, Rebel. "How Did the Financial Crisis Affect Small Business Lending in the United States?" (PDF). Depaul University. Retrieved 14 February 2013.

Jump up ^ Faust, Jon. "Will Higher Corporate Debt Worsen Future Recessions?" (PDF). Retrieved 14 February 2013.

Jump up ^ Patrick Clark. "Alternative Small Business Lender OnDeck Doubles Its Revenue - Businessweek". Businessweek.com.

Jump up ^ Ianthe Jeanne Dugan and Ruth Simon (8 January 2014). "Alternative Lenders Peddle Pricey Commercial Loans". WSJ.

Jump up ^ "Need A Business Loan? Impress The Algorithm, Not The Loan Officer". Forbes. 27 March 2013.

Jump up ^ Laura Entis (20 November 2013). "Where Startup Funding Really Comes From (Infographic)". Entrepreneur.

Jump up ^ Prosser, Marc. "Rollover for Business Startup (ROBS) Financing Guide". Fit Small Business. Retrieved 6 November 2015.

Jump up ^ McManus, Brian; Matthews, Mark. "Examinations of Rollovers as Business Start-Ups (ROBS) Arrangements: A Guide to Surviving IRS Scrutiny". BNA, Inc.

Jump up ^ Julianelle, Michael. "Guidelines regarding rollovers as business start-ups" (PDF). U.S. Internal Revenue Service. Retrieved 6 November 2015.

Categories: Corporate finance

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From Wikipedia, the free encyclopedia

SME finance is the funding of small and medium-sized enterprises, and represents a major function of the general business finance market – in which capital for different types of firms are supplied, acquired, and costed or priced. Capital is supplied through the business finance market in the form of bank loans and overdrafts; leasing and hire-purchase arrangements; equity/corporate bond issues; venture capital or private equity; and asset-based finance such as factoring and invoice discounting.[1]

However, not all business finance is external/commercially supplied through the market. Much finance is internally generated by businesses out of their own earnings and/or supplied informally as trade credit, that is, delays in paying for purchases of goods and services.

Contents [hide]

1 Importance

2 Gap

3 The management of business lending

4 Different Types of Lenders

5 References

6 External links

Importance[edit]

The economic and banking importance of the small and medium enterprise (SME) sector is well recognized in academic and policy literature.[2][3] It is also acknowledged that these actors in the economy may be under-served, especially in terms of finance.[4] This has led to significant debate on the best methods to serve this sector.

Although there have been numerous schemes and programmes in different economic environments, there are a number of distinctive recurring approaches to SME finance.[5]

Collateral based lending offered by traditional banks and finance companies is usually made up of a combination of asset-based finance, contribution based finance, and factoring based finance, using reliable debtors or contracts.

Information based lending usually incorporates financial statement lending, credit scoring, and relationship lending.

Viability based financing is especially associated with venture capital.

Reliable for all the small ticket loan.

Gap[edit]

A substantial portion of the SME sector may not have the security required for conventional collateral based bank lending, nor high enough returns to attract formal venture capitalists and other risk investors. In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring). This has led to claims of an "SME finance gap" or Nano gap [6]– particularly in emerging economies.[7] At a workshop hosted by The Network for Governance, Entrepreneurship & Development (GE&D) in Geneva in July 2008, SMEs that fall into this category have been defined as Small Growing Businesses (SGBs).[8]

There have been at least two distinctive approaches to try to overcome the so-called SME finance gap.

The first has been to broaden the collateral based approach by encouraging bank lenders to finance SMEs with insufficient collateral. This might be done through an external party providing the collateral or guarantees required. Unfortunately, such schemes are counter to basic free market principles, and they tend to be unsustainable. This sector is increasingly called the Meso-finance sector.[9]

However, there are no evidence of any significant structural barriers to the supply of bank or private equity finance to suitable SME applicants on mutually satisfactory terms and conditions in Britain. The main obstacles to funding here appear to be on the demand rather than the supply side of the business finance market. This is mainly in the form of:

Lack of satisfactory business plans, accounting and other information;

Inadequate assets for use as security; and,

Insufficiently high levels of profitability, gearing, liquidity, stability, and other business-financial performance criteria on the part of funding applicants.[10]

Thus, the second approach has been to broaden the viability based approach. Since the viability based approach is concerned with the business itself, the aim has been to provide better general business development assistance[11] to reduce risk and increase returns. This often entails a detailed review and assistance with the business plan.

A common aim or feature of the viability based approach is the provision of appropriate finance that is tailored to the cash flows of the SME.

Although the returns generated by this approach in less developed countries may not be attractive to venture capitalists, they can be significantly better than conventional collateral based lending – whilst at the same time being less risky than the typical venture capitalist business. Thus, a new, distinct asset class, offering a new avenue for diversification, is available to investors. With higher profitability than traditional SME finance and lower risk than traditional venture capital, this sector has been named the "growth finance sector".

In the past, a significant obstacle to applying this approach in less developed countries has been getting the information required to assess viability, plus the costs of transferring and providing business development assistance. However, in the last several years, improved information and communications technology have made the process easier and cheaper. As technology and information sharing continue to improve, the approach could become significantly more cost-effective and attractive to established financiers with viability based approaches, and to consultants providing business development assistance to SMEs in other, more mainstream areas.

Some investors have promoted this approach as a means of achieving wider social benefits,[12] while others have been interested in developing it largely in order to generate better financial-economic returns for shareholders, investors, employees, and clients.

A new organisation, Aspen Network for Development Entrepreneurs (ANDE),[13] has been created to bring the growth finance stakeholders together, with the view to evolve into an association serving the sector, similar to what venture capital or microfinance associations do. They have declared their target audience to be Small Growing Businesses.

In 2008, a group of financial service providers and other stakeholders came together to form the Finance Alliance for Sustainable Trade (FAST).[14] FAST is an association of financial service providers explicitly committed to improving access to finance for sustainable SMEs—defined as SMEs that are compliant with one or more of a host of growing sustainability standards (such as organics, fair trade, forest stewardship council etc.). FAST states that one of its objectives is to improve access to finance for SMEs by linking sustainable trading relationships with sustainable production practices—both of which have been observed to reduce the risk profile of SMEs in traditionally high risk sectors.[15]

The management of business lending[edit]

The effective management of lending to SMEs can contribute significantly to the overall growth and profitability of banks. There has been considerable research and analysis into the methods by which banks assess and monitor business loans, manage business financing risks, and price their products – and how these methods might be further developed and improved.[16][2]

There has been particularly intensive scrutiny of the kinds of business financial information that banks use in making lending decisions, and how reliable that information actually is.

Banks have traditionally relied on a combination of documentary sources of information, interviews and visits, and the personal knowledge and expertise of managers in assessing and monitoring business loans. However, when assessing comparatively small and straightforward business credit applications, banks may largely rely on standardized credit scoring techniques (quantifying such things as the characteristics, assets, and cash flows of businesses/owners). Using such techniques – and also centralizing or rationalizing business-banking operations generally – can significantly reduce processing costs. Standardized computer-based assessment may also be more accurate and fairer than reliance on the personal judgments of local bank managers. As a result, banks may now be able to offer more loans, faster and in larger amounts, and reduce previously high security requirements.[17]

However, business lending as a whole is substantially more diverse and complex than personal and residential mortgage lending. This, coupled with the large size and inherently risky nature of many business loans, tend to limit the scope and desirability of computerized credit scoring in assessment and monitoring.[18]

Different Types of Lenders[edit]

Small Business Administration Loans – These are government-backed loans. The government basically doesn’t offer the finance but lays down a set of rules and regulations for approved partners like banks, NBFCs and microfinance entities to provide the loans. For the lender, it means lower risk and for the borrower, it means comparatively lower interest rates. But for those who need loans on a really short notice or don’t have access to all the paperwork that is needed, this option rarely works out. Plus, there are a lot of extra fees to be paid

Conventional Business Loans from Banks – Banks provide SBA loans and they also provide loans on their own terms and conditions. Here, the government is not guaranteeing that the bank will be receiving its money back. Hence, it all comes down to how the bank sees your business. If your business is perceived as a profitable one, you might get lesser interest rates than advertised and will not require to adhere to very stringent rules as the SBA loans. The approval process can be faster, though it’s often difficult to get approved by banks. The repayment duration is shorter than SBA loans

Business Financing from Alternative Lenders – When it comes to faster turnaround times and lesser rules and regulations, these options are the best. Be it small businessmen who have started their journey or established business owners with high margins, alternative lenders are preferred for almost immediate business financing. The flipside to these lenders is that the interest rates can be comparatively much higher for a first-time borrower.[19][3]

References[edit]

Jump up ^ The Business Finance Market: A Survey, Industrial Systems Research Publications, Manchester UK, 3rd. revised edition 2008.[1]

Jump up ^ UN/ECE Secretariat. "SMEs – Their role in foreign trade". www.unece.org. United Nations Economic Commission for Europe (UN/ECE). Retrieved 2007-06-28.

Jump up ^ Tyler Biggs. "Is small beautiful and worthy of subsidy" (PDF). www.unece.org. World Bank (UN/ECE). Retrieved 2008-05-30.

Jump up ^ "OECD-APEC Keynote Paper on Removing Barriers to SME Access to International Markets" (PDF). www.oecd.org. OECD. 2006. Retrieved 2007-06-28.

Jump up ^ Adapted from: Berger, A.; G. Udell (2005). "A More Complete Conceptual Framework for SME Finance".

Jump up ^ Equicapita - Who Will Buy Boomer SMEs? http://www.equicapita.com/wp-content/uploads/2013/04/Equicapita_May_050214.pdf

Jump up ^ Newberry, Derek (2006). "THE ROLE OF SMALL- AND MEDIUM-SIZED ENTERPRISES IN THE FUTURES OF EMERGING ECONOMIES". Retrieved 2008-05-19.

Jump up ^ "GE&D". Retrieved 2008-11-25.

Jump up ^ Sanders, Thierry (2006). "Meso-Finance". Retrieved 2008-05-30.

Jump up ^ The Business Finance Market: A Survey, Industrial Systems Research Publications, op.cit., page 57.

Jump up ^ Kamanyi, Judy (2003). "Poverty Reduction Strategy Paper, Development Assistance, Gender and Enterprise Development Impact Assessment: The Case of Uganda" (PDF). Archived from the original (PDF) on 2007-09-28. Retrieved 2007-06-28.

Jump up ^ Hoffman, Kurt; Chris West; Karen Westley; Sharna Jarvis (March 2005). "Social impact model Enterprise Solutions to Poverty". Shell Foundation. Retrieved 2007-06-28.

Jump up ^ "ANDE". Archived from the original on 2008-06-20. Retrieved 2008-11-25.

Jump up ^ "FAST". Retrieved 2010-01-01.

Jump up ^ See Potts, Jason (2007) Alternative trade initiatives and income predictability: Theory and evidence from the coffee sector http://www.iisd.org/pdf/2007/trade_price_alt_trade.pdf

Jump up ^ The Management of Business Lending: A Survey, ISR/Google Books, 2002.

Jump up ^ "The IFC SME Banking Knowledge Guide, 2009"

Jump up ^ The Management of Business Lending: A Survey, ISR/Google Books, 2002, page 39.

Jump up ^ SMALL BUSINESS LOANS – WHY AND WHY NOT, Lendingkart Blog, November 15, 2016.

External links[edit]

SME Finance Forum

Indian SME Finance News, Events and Articles

Small & Medium-Sized Business Finance: A Review

EBRD SME finance

Innovative financing for sustainable small and medium enterprises in Africa

Making Finance Work for Africa: SME Finance & Leasing

Categories: EntrepreneurshipCorporate finance

Business loan

From Wikipedia, the free encyclopedia

A business loan is a loan specifically intended for business purposes.[1] As with all loans, it involves the creation of a debt, which will be repaid with added interest. There are a number of different types of business loans, including bank loans, mezzanine financing, asset-based financing, invoice financing, microloans, business cash advances and cash flow loans.[2]

Contents [hide]

1 Types

1.1 Bank loan

1.2 SBA loans

1.3 Mezzanine finance

1.4 Asset-based finance

1.5 Invoice finance

1.6 Microloans

1.7 Online Lenders

2 Secured and unsecured business loans

2.1 Personal guarantees

3 References

Types[edit]

Bank loan[edit]

See also: loan

A bank loan may be obtained from a bank and may be either secured or unsecured. For secured loans, banks will require collateral, which may be lost if repayments are not made. The bank will probably wish to see the business’s accounts, balance sheet and business plan, as well as studying the principals' credit histories. Many smaller businesses are now however turning towards Alternative Finance Providers, especially in the case of smaller firms.[3]

Loans from credit unions may be referred to as bank loans as well. Business loans from credit unions received the second highest level of satisfaction from borrowers after loans from small banks.[4]

SBA loans[edit]

The US Small Business Administration (SBA) does not make loans; instead it guarantees loans made by individual lenders. The main SBA loan programs are SBA 7(a) which includes both a standard and express option; Microloans (up to $50,000); 504 Loans which provide financing for fixed assets such as real estate or equipment; and Disaster loans. In FY 2016, total 7(a) volume was $11,967,861,900 and total 504 loan volume was $2,517,433,000.[5]

Mezzanine finance[edit]

Main article: mezzanine capital

Mezzanine finance effectively secures a company’s debt on its equity, allowing the lender to claim part-ownership of the business if the loan is not paid back on time and in full.[6] This allows the business to borrow without putting up other collateral, but risks diluting the principals’ equity share in case of default.

Asset-based finance[edit]

Main article: Asset-based lending

Once considered the finance option of last resort, asset-based lending has become a popular choice for small businesses lacking the credit rating or track record to qualify for other forms of finance.[7] In simple terms, it involves borrowing against one of the company’s assets, with the lender focusing on the quality of the collateral rather than the credit rating and prospects of the company. A business may borrow against several different types of asset, including premises, plant, stock or receivables.

Invoice finance[edit]

Main articles: invoice discounting and factoring (finance)

In recent years, it has become increasingly difficult for SMEs to obtain traditional finance from banks. Alternative options are invoice discounting or factoring, whereby the company borrows against its outstanding invoices, with the ability to obtain funds as soon as new invoices are created. It is often questioned which option is best for your business – factoring or discounting – and the answer depends on how the business wants to be perceived by customers.[citation needed] With factoring, the finance company charges interest on the loan until the invoice is paid, as well as fees, and the finance company takes ownership of the debtor ledger and uses its own credit control team to secure payment. With invoice discounting, the business maintains control of its own ledger and chases debts itself.

Microloans[edit]

Smaller loans, usually for loan amounts of $100,000 USD or less, are referred to as “microloans.” Banks are less likely to make these loans than alternative lenders. When they do, the decision is usually based on the personal credit score of the business and/or the business credit score.[8]

Online Lenders[edit]

There has been a rise in the number of online lenders offering small business loans. Online alternative lenders originated an estimated $12 billion in small business loans in 2014, with unsecured consumer loans representing $7 billion and small business loans accounting for approximately $5 billion.[8] Nonbank lenders that make small business loans have doubled their outstanding portfolio balance every year since 2000.[9] Some online originate loans from their own capital. Others may use a “marketplace” model, in which they match borrowers to loan products from a variety of lenders. Others use crowdfunding platforms that allow businesses to raise capital from a wide variety of sources.

Secured and unsecured business loans[edit]

Main articles: secured loan and unsecured debt

Business loans may be either secured or unsecured. With a secured loan, the borrower pledges an asset (such as plant, equipment, stock or vehicles) against the debt. If the debt is not repaid, the lender may claim the secured asset. Unsecured loans do not have collateral, though the lender will have a general claim on the borrower’s assets if repayment is not made. Should the borrower become bankrupt, unsecured creditors will usually realise a smaller proportion of their claims than secured creditors. As a consequence, secured loans will generally attract a lower rate of interest.

Lenders that make business loans often use a UCC filing to alert other creditors of their security interest in the property of the business. UCC filings may be placed against specific assets, or a blanket UCC filing secures interest in all property. UCC filings may affect the business credit score and may make it more difficult to obtain subsequent financing.[citation needed]

Personal guarantees[edit]

Many lenders require principals with 20% or greater ownership in the business to provide a personal guarantee. The personal guarantee allows the lender to attempt to collect the debt from the personal assets of the guarantors. Small business lenders may waive the personal guarantee requirement if the business has strong business credit scores and revenue.[citation needed] In May 2016, changes to the Member Business Lending rule by the National Credit Union Administration board further improved these loans, by allowing credit unions discretion in obtaining a personal guarantee from a borrower.[10]

References[edit]

Jump up ^ Jonnard, Claude (1997-12-29). International Business and TradeTheory, Practice, and Policy. CRC Press. ISBN 9781574441550.

Jump up ^ Aryya, Gangopadhyay (2001-07-01). Managing Business with Electronic Commerce: Issues and Trends: Issues and Trends. Idea Group Inc (IGI). ISBN 9781591400073.

Jump up ^ "Goedkoopste Lening: In 5 Stappen Aanvragen (2017 Update) » Bankr". Bankr (in Dutch). Retrieved 2017-05-24.

Jump up ^ Federal Reserve Banks of, New York; et al. (March 2016). "2015 Small Business Credit Survey Employer Firms". Newyorkfed. Retrieved April 10, 2017.

Jump up ^ "SBA website report" (PDF). SBA. March 31, 2017. Retrieved April 7, 2017.

Jump up ^ "Mezzanine Financing". Investopedia.

Jump up ^ "Asset-Based Financing Basics". Journal of Accountancy. August 1, 2011.

^ Jump up to: a b Brainard, Lael (September 30, 2015). "Community Banks, Small Business Credit and Online Lending". Federal Reserve. Retrieved April 7, 2017.

Jump up ^ "Marketplace Lending Was Just What Banks Needed". American Banker. Retrieved 2017-04-10.

Jump up ^ "Why Credit Unions Are a Favorite Funding Option for Small Businesses". AllBusiness.com. 2016-04-13. Retrieved 2017-04-10.

[hide] v t e

Debt

Instruments

Bonds

Corporate Debenture Government Municipal

Loans

Business loan Consumer lending Loan shark Payday loan Predatory lending Usury

Management

Bankruptcy Consolidation Management plan Relief Restructuring Debt-snowball method Debtor-in-possession (DIP) financing Loan guarantee

Collection · Evasion

Bad debt Charge-off Collection agency Compliance Debt bondage Debtors' prison Distraint Garnishment Phantom debt Strategic default Tax refund interception

Markets

Consumer Corporate Government Municipal Venture Buyer Deposit account Fixed income Money market Securitization

Economics

Consumer leverage ratio Debt levels and flows External / Internal / Odious debt

US peer-to-peer lending company, headquartered in San Francisco, California.[7] It was the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC), and to offer loan trading on a secondary market. Lending Club operates an online lending platform that enables borrowers to obtain a loan, and investors to purchase notes backed by payments made on loans. Lending Club is the world's largest peer-to-peer lending platform.[8] The company claims that $15.98 billion in loans had been originated through its platform up to 31 December 2015.[9]

Lending Club enables borrowers to create unsecured personal loans between $1,000 and $40,000. The standard loan period is three years. Investors can search and browse the loan listings on Lending Club website and select loans that they want to invest in based on the information supplied about the borrower, amount of loan, loan grade, and loan purpose. Investors make money from interest. Lending Club makes money by charging borrowers an origination fee and investors a service fee.

Lending Club also makes traditional direct to consumer loans, including automobile refinance transactions, through WebBank, an FDIC-insured, state-chartered industrial bank that is heaquarted in Salt Lake City Utah. The loans are not funded by investors but are assigned to other financial institutions.

The company raised $1 billion in what became the largest technology IPO of 2014 in the United States. Though viewed as a pioneer in the fintech industry and one of the largest such firms, Lending Club experienced problems in early 2016, with difficulties in attracting investors, a scandal over some of the firm's loans and concerns by the board over CEO Renaud Laplanche's disclosures leading to a large drop in its share price and Laplanche's resignation.

Contents [hide]

1 History

1.1 Pre-IPO growth

1.2 Initial Public Offering (IPO)

1.3 Car loans and mortgages

1.4 2016

2 Business model

2.1 Overview

2.2 Loan ownership

2.3 Credit risk

2.4 Loan performance statistics

3 Board of directors

4 Recognition

5 See also

6 References

7 Further reading

8 External links

History[edit]

Lending Club was initially launched on Facebook as one of Facebook's first applications.[10][11] After receiving $10.26 million in a Series A funding round in August 2007, from venture capital investors Norwest Venture Partners and Canaan Partners, Lending Club was developed into a full-scale peer-to-peer lending company.[10][12]

On April 8, 2008, Lending Club temporarily suspended new lender registration, canceled its affiliate program and entered a "quiet period" while it awaited approval to issue promissory notes to lenders.[13] On June 20, 2008, Lending Club filed an S-1 statement[14] with the U.S. Securities and Exchange Commission (SEC) seeking the registration of $600 million in "Member Payment Dependent Notes" to be issued on its Web site.[15] On August 1, 2008, Lending Club filed an amendment to its Form S-1[16] outlining new interest rate formulas as well as more details on a "resale trading system".[17] On October 14, 2008, Lending Club announced its completion of the SEC registration process, posted the filed prospectus on its website, and resumed new lender registration. Notes issued on or after October 14, 2008 represent Lending Club securities rather than direct obligations of the ultimate borrower and are tradable (can be bought and sold) on the Foliofn trading platform.[18] In March 2009, Lending Club raised $12 million in a Series B funding round led by Morgenthaler Ventures.[19]

Pre-IPO growth[edit]

In April 2010, the company raised $24.5 million in a Series C funding led by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.[20]

In August 2011, Lending Club raised an additional $25 million in venture capital from Union Square Ventures and Thomvest, owned by the Thomson family of Thomson-Reuters.[1][21] This led to Lending Club earning a $275 million post-money valuation and an increase of $80 million in valuation from the preceding year.[22] Thomson-Reuters founder Peter J. Thomson also invested an unspecified amount of his personal fortune into Lending Club.[23] In fall 2011, Lending Club's headquarters moved to downtown San Francisco; its earlier offices were located in Sunnyvale and Redwood City.[1] Co-founder Soul Htite moved to China to start Dianrong.com, a peer-to-peer lending company based in Shanghai.[24]

In 2012, the company employed about 80 people, with Renaud Laplanche continuing as the company CEO and chairman of the Board of Directors.[1][25][26] The company averaged about $1.5 million in loan originations daily, with a total of $600 million since its founding.[27] In April 2012, Lending Club's SEC registration from 2008 was renewed for $1 billion USD in Member Payment Dependent Notes and became effective on April 10, 2012.[28] In June 2012, the company received $15 million in new funding from Kleiner Perkins Caufield & Byers and $2.5 million of personal investments from John J. Mack. Kleiner Perkins partner Mary Meeker joined Mack on Lending Club's board of directors.[3] This led to a $570 million valuation of the company.[29] In November 2012, Lending Club surpassed $1 billion in loans issued since inception and announced they were now cash flow positive.[30]

In May 2013, Google Capital purchased a stake in Lending Club.[29] Lending Club also began partnering with smaller banks in order to help streamline their small loans operations. In June 2013 the company partnered with Titan Bank in Texas and Congressional Bank in Maryland in order to help them facilitate loans that would have been otherwise unprofitable for them.[31][32]

Initial Public Offering (IPO)[edit]

In March 2014, Lending Club began providing loans to small businesses.[33] In April 2014 Lending Club acquired Springstone Financial.[34] In May 2014 Lending Club formed a partnership with Union Bank.[35] On August 27, 2014, Lending Club filed for an IPO with the SEC,[36] the offering taking place in December 2014.[37] On December 10, 2014, the company raised almost $900 million in the largest U.S. tech IPO of 2014. The stock ended the first trading day up 56%, valuing the company at $8.5bn.[38]

Stevenson Place, San Francisco, the location of Lending Club headquarters

Car loans and mortgages[edit]

Laplanche told Forbes in April 2015 that Lending Club would expand into car loans and mortgages.[39] Lending Club also announced a partnership with Google to extend credit to smaller companies that use Google's business services.[40] The company signed partnerships with Google, Alibaba.com, BancAlliance, and HomeAdvisor, including vetting community bank lenders for BancAlliance (a group of 200 banks), in order to send people on its platform to various community finance institutions.[41] That year Lending Club partnered with Opportunity Fund, announced by former President Bill Clinton at the Clinton Global Initiative. The partnership intended to provide $10 million to small businesses in areas of California that are underserved by lenders.[42] Lending Club and other small business lenders partnered with Sam’s Club to deliver its “business lending center” product.[43] In August 2015 the company created Lending Club Open Integration (LCOI).[44] In October, the company launched a multi-draw line of credit product for small businesses.[45]

2016[edit]

Like other peer-to-peer lenders including Prosper, Sofi and Khutzpa.com, Lending Club experienced increasing difficulty attracting investors during early 2016. This led the firm to increase the interest rate it charges borrowers on three occasions during the first months of the year.[46] The increase in interest rates and concerns over the impact of the slowing United States economy caused a large drop in Lending Club's share price.[47]

In April 2016, a Lending Club employee reported to Laplanche that the dates on approximately $US 3 million in the firm's loans appeared to have been altered.[46] Lending Club's internal auditor engaged an outside firm to investigate the report.[48] This investigation found additional problems with loans, including that $US 22 million in loans which had been sold to the Jefferies investment bank did not in fact meet the bank's investment criteria. Lending Club bought these loans back from the bank and resold them.[46][49]

The New York Times reported that the investigation found that Laplanche had not disclosed to the board that he owned part of an investment fund which Lending Club was considering purchasing.[46] The Wall Street Journal also stated that Laplanche was found to have not fully disclosed what he knew about the problematic loans.[49]

On 6 May Lending Club's board made it clear to Laplanche that he no longer had their confidence, leading to his resignation on 9 May.[46] The Wall Street Journal reported that Laplanche had been fired by the board. Three of the firm's other managers had also been fired or had resigned by that time as a result of the problematic loans.[49] Lending Club's stock price fell by a further 34 percent after Laplanche's departure was announced.[46] This placed the stock price at 70 percent of the price at the time of the firm's initial public offering.[48] As a result of the incident, the Securities and Exchange Commission was reported to be investigating Lending Club's disclosures to investors.[49] From May 2015 until May 2016 the share price of Lending Club had decreased by over 60%. Since Laplanche's announced exit the share price cut in half again.[50]

Business model[edit]

Overview[edit]

Lending Club enables borrowers to create loan listings on its website by supplying details about themselves and the loans that they would like to request. All loans are unsecured personal loans and can be between $1,000 - $40,000. On the basis of the borrower’s credit score, credit history, desired loan amount and the borrower’s debt-to-income ratio, Lending Club determines whether the borrower is credit worthy and assigns to its approved loans a credit grade that determines payable interest rate and fees. The standard loan period is three years; a five-year period is available at a higher interest rate and additional fees. The loans can be repaid at any time without penalty.

Only investors in 39 US states are eligible to purchase notes on the Lending Club Platform.[51] However, eligibility differs when purchasing notes on the secondary market, FolioFN. Borrowers from all but 2 US states are eligible to apply for a loan.[51]

Investors can search and browse the loan listings on Lending Club website and select loans that they want to invest in based on the information supplied about the borrower, amount of loan, loan grade, and loan purpose. The loans can only be chosen at the interest rates assigned by Lending Club but investors can decide how much to fund each borrower, with the minimum investment of $25 per note.[52]

Investors make money from interest. Rates vary from 6.03% to 26.06%, depending on the credit grade assigned to the loan.[53] Lending Club makes money by charging borrowers an origination fee and investors a service fee. The size of the origination fee depends on the credit grade and ranges to be 1.1%-5.0% of the loan amount. The size of the service fee is 1% on all amounts the borrower pays.[54] The company facilitates interest rates that are better for lenders and borrowers than they would receive from most banks. It has averaged between a six and nine percent return to investors between its founding and 2013.[55] However, because lenders are making personal loans to individuals on the site, their gains are taxable as personal income instead of investment income. Therefore, income from Lending Club loans may be taxed at a higher rate than investments that are taxed at the capital gains rate.

Loan ownership[edit]

After the notes are issued, Lending Club purchases the loans from the issuing bank and notes become the obligations of Lending Club, and not of the ultimate borrower: Lending Club promises to pay the noteholder monies it receives from the borrower less its service fees, while the holders of Lending Club notes have the status of unsecured creditors of Lending Club. This means that there is a risk that the investor may lose all or part of the investment if Lending Club becomes insolvent or declares bankruptcy, even if the ultimate borrower continues to pay.[26]

The investors have the ability to put notes up for sale before the notes have reached maturity. This service is offered in a partnership with FOLIOfn Investments which charges a 1% fee on note sales, making Lending Club the first peer-to-peer lending network to offer a secondary market for peer-to-peer loans. Other peer to peer lending networks such as Khutzpa.com have subsequently also partnered with FOLIOfn Investments to offer a secondary market.[56][57]

As of 2016, a high proportion of funds for Lending Club-facilitated loans came from hedge funds. During May of that year Lending Club was seeking to sell hundreds of millions of dollars worth of loans as bonds as part of a strategy to overcome difficulties in accessing sufficient funding.[58]

Credit risk[edit]

When initially founded, Lending Club positioned itself as a social networking service and set up opportunities for members to identify group affinities, based on a theory that borrowers would be less likely to default to lenders with whom they had affinities and social relationships. It developed an algorithm called LendingMatch for identifying common relationship factors such as geographic location, educational and professional background, and connectedness within a given social network.[59][60][61]

After registering with the SEC, Lending Club stopped presenting itself as a social network and maintaining that social affinity will necessarily reduce the defaulting risk. It now presents the algorithm just as a search tool for investors to find Notes they would like to purchase, using borrower and loan attributes such as the length of a loan term, target weighted average interest rate, borrower credit score, employment tenure, home ownership status, and others.[62] To reduce default risk, Lending Club focuses on high-credit-worthy borrowers, declining approximately 90% of the loan applications it received as of 2012[63] and assigning higher interest rates to riskier borrowers within its credit criteria.[27] Only borrowers with FICO score of 660 or higher can be approved for loans.[53]

The statistics on Lending Club's website state that, as of 31 December 2016, 62.3 percent of borrowers report using their loans to refinance other loans or pay credit card debt.[64]

Loan performance statistics[edit]

As of June 30, 2015, the average Lending Club borrower has a FICO score of 699, 17.7% debt-to-income ratio (excluding mortgage), 16.2 years of credit history, $73,945 of personal income and takes out an average loan of $14,553 that s/he uses for debt consolidation or for paying off credit card debts. The investors had funded $11,217,348,156 in loans, with $1,911,759,192 coming from Q2 2015. The nominal average interest rate is 14.08%, default rate 3.39%, and an average net annualized return (net of defaults and service fees) of 8.93%.[27][65] The average returns of investment for Lending Club lenders are between 5.47% and 10.22%, with 23 straight quarters of positive returns as of the second quarter of 2013.[66]

Board of directors[edit]

John Mack, senior advisor, Morgan Stanley[67]

Mary Meeker, partner, Kleiner Perkins Caufield & Byers[68]

Hans Morris, advisory director, General Atlantic, former president of Visa Inc[69]

Lawrence H. Summers, Professor, Harvard University[70][71]

Daniel T. Ciporin, general partner, Canaan Partners[70][72]

Jeff Crowe, managing partner, Norwest Venture Partners[70]

Rebecca Lynn, partner, Morgenthaler Ventures[70]

Recognition[edit]

In 2011 and 2012 the company was named to as one of the AlwaysOn Global 250.[73][74] Lending Club is the winner of the World Economic Forum 2012 Technology Pioneer Award.[75] It has been recognized by Forbes as one of America’s 20 most promising companies in 2011[1] and 2012,[76] and by Fast Company as one of the ten most innovative financial companies in the world.[77] It was named one of the Disruptor 50 by CNBC in May 2013 and 2014, as a disruptive innovator in next generation financial services.[78][79] In 2014, Lending Club was recognized by Inc. as one of the 500 Fastest Growing Private Companies in America at #248.[80] Renaud Laplanche, the company’s founder and CEO, also received The Economist Innovation Award in 2014 for the consumer products category.[81]

See also[edit]

Comparison of crowdfunding services

Disintermediation

References[edit]

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Jump up ^ Campbell, Dakin (April 12, 2012). "Ex-Morgan Stanley CEO John Mack Joins LendingClub Board". Businessweek.

^ Jump up to: a b Taylor, Colleen (June 6, 2012). "Lending Club Lands $17.5 Million from Kleiner Perkins and Morgan Stanley Chairman John Mack". Tech Crunch. Retrieved June 8, 2012.

Jump up ^ https://www.lendingclub.com/public/board-of-advisors.action

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Jump up ^ Somerville, Heather (27 August 2014). "Lending Club could be one of Silicon Valley’s biggest tech IPOs of 2014" (Business). United States: Mercury News. Digital First Media. Retrieved 10 September 2014.

Jump up ^ McBride, Sarah (4 December 2014). "AvantCredit Raises $225 Million From Tiger Global, Peter Thiel". United States: Business Insider. Business Insider Inc. Retrieved 25 January 2017.

Jump up ^ Schumpeter Peer review The Economist 5 January 2013; Accessed 22 March 2013.

Jump up ^ "Lending Club Statistics". Lending Club.

^ Jump up to: a b Barret, Victoria (December 2, 2010). "Making Personal Loans For Fun And Profit". Forbes.

Jump up ^ Allen Stern (August 6, 2007). "LendingClub Founder and CEO, Renaud Laplanche – Interview". Center Networks. Archived from the original on March 8, 2012. Retrieved April 1, 2012.

Jump up ^ Ohayon, Ouriel (September 11, 2007). "Entretien avec Renaud Laplanche, CEO de LendingClub". Tech Crunch. Archived from the original on March 23, 2012. Retrieved April 5, 2012.

Jump up ^ "Quiet Period". Lending Club. Retrieved April 8, 2008.

Jump up ^ - Lending Club S-1 Filing PDF. Retrieved (7-3-2008)

Jump up ^ - Techcrunch. Lending Club Files For SEC Registration. Retrieved (7-3-2008)

Jump up ^ - Lending Club S-1 Amendment No. 1. Retrieved (8-6-2008)

Jump up ^ - Lending Club Files Amended S-1. Retrieved (8-6-2008)

Jump up ^ - Lending Club SEC Prospectus. Retrieved (10-15-2008)

Jump up ^ Wauters, Robin (March 19, 2009). "Lending Club gets a 12 million credibility boost". Tech Crunch. Retrieved May 12, 2009.

Jump up ^ Wauters, Robin (April 14, 2010). "Lending Club". Tech Crunch. Retrieved August 15, 2010.

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Jump up ^ Wade Roush (September 8, 2011). "Thursday Deals Roundup: Zagat, Platfora, Lending Club & More". Xconomy. Retrieved June 27, 2013.

Jump up ^ Wang, Yue (16 December 2015). "From Lending Club To China: Soul Htite Builds Top Chinese P2P Lending Site Dianrong". Forbes. Retrieved 15 September 2016.

Jump up ^ Mui, Ylan Q. (March 8, 2010). "With bank credit frozen, small U.S. businesses starting to turn to microlenders". Washington Post. Retrieved April 4, 2012.

^ Jump up to: a b "Lending Club prospectus (government filings)". Lending Club. August 15, 2011. Retrieved April 2, 2012.

^ Jump up to: a b c "Lending Club Statistics". Lending Club. Retrieved April 16, 2012.

Jump up ^ "Lending Club Commences $1 Billion Note Offering". Lending Club. April 10, 2012. Retrieved May 17, 2012.

^ Jump up to: a b Dakin Campbell & Ari Levy (May 2, 2013). "Google Buys Stake in LendingClub Startup Valued at $1.55 Billion". Bloomberg News. Retrieved May 28, 2013.

Jump up ^ Empson, Rip (November 6, 2012). "Lending Club Surpasses $1B In Personal Loans, Hits Profitability". Tech Crunch. Retrieved January 30, 2013.

Jump up ^ Mark Calvey (June 20, 2013). "Community banks find a friend in Lending Club". San Francisco Business Times. Retrieved June 27, 2013.

Jump up ^ Lending Club CEO on Getting a Loan Without a Bank CNBC 14 March 2013; Accessed 16 March 2103

Jump up ^ Kimberly Weisul (March 25, 2014). "Frustrated With Your Bank? Lending Club to Make Business Loans". Inc.

Jump up ^ Ari Levy (April 17, 2014). "LendingClub, Valued at $3.8 Billion, Acquires Springstone". Bloomberg News.

Jump up ^ JD Alois (May 5, 2014). "Lending Club & Union Bank Create Strategic Alliance". Crowdfund Insider. Crowded Media Group.

Jump up ^ "Form S-1". EDGAR. August 27, 2014.

Jump up ^ Mark Calvey (December 10, 2014). "Lending Club soars on first day of trading — 5 things to watch". San Francisco Business Times.

Jump up ^ "LendingClub shares debut to 56% stock rise" (Press release). USA Today. 11 December 2014.

Jump up ^ Baptiste Su, Jean. "Exclusive Interview: Lending Club CEO Plans Expansion Into Car Loans, Mortgages". Forbes. Retrieved 2 April 2015.

Jump up ^ Buhayar, Noah. "Lending Club Wants to Broaden Its Membership". Bloomberg. Retrieved 23 April 2015.

Jump up ^ https://blogs.wsj.com/moneybeat/2015/02/10/lending-clubs-new-deals-fuel-investor-excitement/

Jump up ^ http://www.nasdaq.com/article/will-lendingclub-opportunity-fund-affiliation-spur-growth-analyst-blog-cm487536

Jump up ^ http://fortune.com/2015/04/22/walmart-samsclub-lendingclub/

Jump up ^ http://www.crowdfundinsider.com/2015/08/72685-lending-club-launches-apis-for-easy-integration-with-online-brokers-advisors/

Jump up ^ http://www.crowdfundinsider.com/2015/10/75807-building-business-lending-club-grows-sme-finance-vertical-with-new-line-of-credit/

^ Jump up to: a b c d e f Corkery, Michael (9 May 2016). "As Lending Club Stumbles, Its Entire Industry Faces Skepticism". The New York Times. Retrieved 10 May 2016.

Jump up ^ "A ripple of fear". The Economist. 26 March 2016. Retrieved 10 May 2016.

^ Jump up to: a b Levy, Ari (9 May 2016). "LendingClub board lost trust in CEO amid probe: Sources". CNBC. Retrieved 10 May 2016.

^ Jump up to: a b c d Rudegair, Peter (9 May 2016). "LendingClub CEO Fired Over Faulty Loans". The Wall Street Journal. Retrieved 10 May 2016.

Jump up ^ http://www.investing.com/search?q=lending%20club%20cop

^ Jump up to: a b http://www.crowdfundinsider.com/2015/10/75791-lending-club-now-open-to-investors-in-three-more-states/

Jump up ^ - About Lending. Retrieved (12-28-2007)

^ Jump up to: a b "Interest Rates and How We Set Them". Lending Club. Retrieved May 18, 2012.

Jump up ^ "Rates and Fees". Lending Club. Retrieved April 16, 2012.

Jump up ^ John Blackstone (March 24, 2013). "Share and Share Alike". CBS News. Retrieved May 28, 2013.

Jump up ^ - Lending Club. Lending Club SEC Registration. Retrieved (10-15-2008)

Jump up ^ "How Trading Works". Retrieved May 28, 2013.

Jump up ^ Rudegeair, Peter; Baer, Justin (10 May 2016). "Goldman, Jefferies Put LendingClub Deals on Hold". The Wall Street Journal. Retrieved 11 May 2016.

Jump up ^ "How It Works". Retrieved December 28, 2007.

Jump up ^ Daniel Wolfe (December 6, 2007). "P-to-P Debt Consolidating To Affect Bank Balances?" (PDF). American Banker. Retrieved December 12, 2007.

Jump up ^ Chu, Kathy (December 25, 2007). "Alternative lending sites often have good deals". Businessweek.

Jump up ^ "Lending Club Prospectus" (PDF). October 15, 2010. Retrieved March 1, 2011.

Jump up ^ Matthew Zietlin (December 14, 2012). "Why Is Larry Summers Signing Up With Lending Club?". The Daily Beast. Retrieved May 28, 2013.

Jump up ^ "Lending Club Statistics | Lending Club". www.lendingclub.com. Retrieved 2017-03-27.

Jump up ^ Earn Solid Returns Lending Club; Accessed 22 March 2013

Jump up ^ "The Growth of Peer-to-Peer Lending". Bloomberg News. June 20, 2013. Retrieved June 27, 2013.

Jump up ^ David Benoit John Mack Joins Board of Alternative Lending Company Wall Street Journal, 12 April 2012; Accessed 18. March 2013

Jump up ^ Sarah McBride Mary Meeker breaks her investment fast Reuters 6 June 2012; Accessed 18 March 2013

Jump up ^ Lending Club Current report (From 8-K) US Securities and Exchange Commission, 22 February 2013; Accessed 18. March 2013

^ Jump up to: a b c d Rip Empson With An IPO On Its Radar, Lending Club Adds Former Treasury Secretary Larry Summers To Its Heavyweight Board TechCrunch 13 December 2012; Accessed 18 March 2013

Jump up ^ Why Is Larry Summers Signing Up With Lending Club? The Daily Beast 14 December 2012; Accessed 18 March 2013

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Jump up ^ "Announcing the 2011 AlwaysOn Global 250". July 30, 2011. Archived from the original on April 30, 2013. Retrieved June 27, 2013.

Jump up ^ "Announcing the 2012 AlwaysOn Global 250". July 25, 2012. Retrieved June 27, 2013.

Jump up ^ "Technology Pioneers". World Economic Forum. Retrieved May 17, 2012.

Jump up ^ "America's Most Promising Companies (2012): Lending Club". Forbes. February 7, 2013.

Jump up ^ The world's top 10 most innovative companies in finance Fastcompany.com 11 February 2013; Accessed 22 March 2013.

Jump up ^ "Lending Club". CNBC. May 15, 2013. Retrieved June 27, 2013.

Jump up ^ "Lending Club". CNBC. Retrieved September 10, 2014.

Jump up ^ "Lending Club". Inc.com. Retrieved March 15, 2016.

Jump up ^ "Innovation Awards and Summit 2014". EconomistInsights.com. Retrieved March 15, 2016.

[hide] v t e

Peer-to-peer lending

Companies

Americas

United States

BTCJam Invest Next Door Kiva Lending Club Peerform Prosper Marketplace SoFi United Prosperity Upstart Vittana Virgin Money US (Defunct) Zidisha

Asia

China

Dianrong Lufax Qifang (Defunct)

India

Milaap Rang De

Singapore

Funding Societies

Europe

Germany

Erento Lendico Zencap Global Services

UK

Abundance Investment Assetz Capital BondMason EdAid Folk2Folk Funding Circle Landbay LendInvest Lending Works LendingCrowd RateSetter RebuildingSociety.com ThinCats Unbolted Wellesley & Co. Zopa

Oceania

Australia

DirectMoney

New Zealand

Harmoney

Category Category

Further reading[edit]

Peter Renton, Renaud Laplanche (2012), The Lending Club Story ISBN 978-1-48113-173-5

External links[edit]

Company Website Lending Club official website

Categories: Companies based in San FranciscoFinancial services companies established in 2006Peer-to-peer lending companiesFinancial services companies based in California2006 establishments in CaliforniaCompanies listed on the New York Stock Exchange2014 initial public offerings

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amount of money lent to an individual (usually on a nonsecured basis) for personal, family, or household purposes. Consumer loans are monitored by government regulatory agencies for their compliance with consumer protection regulations such as the Truth in Lending Act. Also called consumer credit or consumer lending.

Read more: http://www.businessdictionary.com/definition/consumer-loan.html

personal loan

Definition

Popular Terms

Consumer loan granted for personal (medical), family (education, vacation), or household (extension, repairs, purchase of air conditioner, computer, refrigerator, etc.) use, as opposed to business or commercial use. Such loans are either unsecured, or secured by the asset purchased or by a co-signor (guarantor). Unsecured loans (called signature loans) are advanced on the basis of the borrower's credit-history and ability to repay the loan from personal income. Repayment is usually through fixed amount installments over a fixed term. Also called consumer loan.

Read more: http://www.businessdictionary.com/definition/personal-loan.html

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Small Business Financing, Loans & Funding - Bank of America

https://www.bankofamerica.com › Bank of America › Small Business

Business Advantage Auto Loan. ... Do I need to have an account with Bank of America to apply for small business financing? Does Bank of America fund new business startups?

7(a) Loan Amounts, Fees & Interest Rates | The U.S. Small Business ...

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SBA can guarantee as much as 85 percent on loans of up to $150,000 and 75 percent on loans of more than $150,000. SBA's maximum exposure amount is $3,750,000. Thus, if a business receives an SBA-guaranteed loan for $5 million, the maximum guarantee to the lender will be $3,750,000 or 75%.

Business Loans: Get the Right Financing for Your Business

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Get the financing to help your business grow. LendingClub offers loans and lines of credit up to $300000. Click to learn more and apply online.

Max Funding: Small Business Loans, Fast Business Loans

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Apply online for business loans, cash loans up to $500k with decision in 5 minutes. We are friendly to small businesses, startup and bad credit history.

Small Business Funding: Where To Go When The Bank Says No

https://www.forbes.com/.../small-business-funding-where-to-go-when-the-bank-says-...

Nov 8, 2012 - But try getting a bank loan to fund such an enterprise. ... And the maximum term for the kind of SBA loan Goldstein used is 10 years, unless the ...

Business & Industry Loan Guarantees | USDA Rural Development

https://www.rd.usda.gov/programs-services/business-industry-loan-guarantees

This program bolsters the availability of private credit by guaranteeing loans for rural businesses. Who may ... What is the maximum amount of a loan guarantee?

Funding Circle: Peer-to-Peer Small Business Lending

https://www.fundingcircle.com/us/

Funding Circle connects investors with businesses looking for capital. "… [loans have] much lower interest rates than many competitors." - Forbes.

Government Small Business Loans — How Do I Get One? - SBA.com

www.sba.com › Funding a Business

Government small business loans help put your own business within reach; unlike for-profit lenders, who are ... The maximum size of such a loan is $5 million.

Bad Credit Small Business Loans | Shield Funding

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We offer bad credit small business loans to business owners that have bad credit. Call Shield ...Maximum Number of Negative Days, 3 to 4 Within a Month.

Maximum Business Loan amount‎: ‎$1,000,000

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MAX Business Funding LLC | LinkedIn

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Learn about working at MAX Business Funding LLC. Join LinkedIn today for free. See who you know at MAX Business Funding LLC, leverage your professional ...

A Guide to Small Business Loans (and How to Get One)

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Aug 24, 2017 - A Guide to Choosing the Right Small Business Loan .... These loans have a maximumamount of $5 million, and borrowers can apply through a ...

Small-Business Loans for Veterans: 10 Best Options for 2017 ...

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Jul 20, 2017 - We've rounded up the best small-business loans for veterans, who may ... the amount offunding to a maximum of 20% of your annual revenue.

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Business Funding: Where to Get Financing - NerdWallet

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Jul 19, 2017 - Small business funding can be hard to secure. We've rounded up top financing options based on your small-business needs.

Small Business Funding for Veterans | Kabbage Small Business Blog

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Sep 24, 2014 - Learn how small business funding for veterans can help you continue to grow and ... The 7(a) loans have a maximum amount of $5 million. 2.

About SBIR | SBIR.gov

https://www.sbir.gov › About

The Small Business Innovation Research (SBIR) program is a highly ... and technological innovation through the investment of Federal research funds in critical ...

Small Business Loans and Small Business Funding | OnDeck

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It's designed for a broad range of general-purpose business needs with a maximum loan amount of $5 million and the funds may be used for many business ...

Business Loans - OnDeck

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Small business term loans from the bank may also be expressed in .... The maximum loan amount for a 7(a) loan is $5 million and the funds may be used for ...

SBA Loans for Your Startup - Entrepreneur

https://www.entrepreneur.com/article/79254

Eligibility: The Microloan program is startup friendly. All new businesses are eligible to apply. Although the maximum loan amount is $35,000, the average loan ...

The Business Backer - Get Small Business Financing Today!

https://www.businessbacker.com/

The Business Backer provides customized funding solutions and advice for small and medium-sizedbusinesses. Apply online now or contact us today.

SBA Term Loans - Wells Fargo Small Business

https://www.wellsfargo.com/biz/sba/

Wells Fargo Small Business offers SBA 7(a) and SBA 504 loans which feature longer terms and lower down payments compared to other types of conventional ...

VA Loans - Small Business Loans for Veterans - The Balance

https://www.thebalance.com › Small Business › Business Finance › Obtaining Financing

Sep 2, 2016 - VA loans for small businesses are there to help veterans and military ... The maximumamount of the MREIDL loan is usually $2 million, which ...

Grants - Velocity Growth Hub

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A £1.25M pot of funding has been secured for businesses in the South East ... ERDF) available – Velocity Growth revenue and Maximum Velocity capital grants.

Kabbage vs OnDeck Capital – Who Offers the Best Business Loans?

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May 17, 2017 - Kabbage issues loans for 12 months or less and has a maximum loan size of $150,000. If you need a small business loan for a short period of ...

A New Approach to Funding Social Enterprises - Harvard Business ...

https://hbr.org/2012/01/a-new-approach-to-funding-social-enterprises

The financial crisis of 2008 deeply damaged the credibility of financial innovation in the general public's mind. As the collapse of markets dried up credit across ...

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How to Finance a Small Business | Small Business Funding Options

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Dec 30, 2016 - One loan program from the SBA is the 7(a) Loan Program, which helps you start a newbusiness or fund your existing business. The maximum ...

[PDF]Repayable Business Finance (RBF) - Business Wales

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What it is: The Welsh Government's major programme to help fund projects delivering job creation. Minimum. £10,001. Maximum. £'ms. Repayable Support.

Oregon Business Development Fund - Business Oregon

www.oregon4biz.com › How We Can Help › Finance Programs

The Oregon Business Development Fund (OBDF) is a revolving loan fund that ... a maximum amount of $1,000,000,; a maximum term and amortization of 20 ...

SBA Loans / Small Business Administration Funding | BusinessLoans ...

https://www.businessloans.com/guide/sba-loans/

Learn what every business owner needs to know about SBA loans. ... The maximum loan amount available under the 7(a) program is $5 million. The 7(a) loan is ...

Small Business Financing News Merchant Advisors | Types Of ...

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Jul 11, 2017 - Types Of Business Loans And Their Funding Criteria ... Maximum Loan Amount: Up to 100% of equipment value; Term: Expected life of ...

Mulligan Funding: Small Business Loans and Working Capital

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It's is an arrangement between a lender and business that establishes a maximum loan balance that the lender permits the borrower to access. Funds from the ...

Compare small business loans | Get funding from $1K to $5 million

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Minimum Amount: $5,000; Maximum Amount: $500,000; Fixed weekly payments to better ... Fund YourBusiness with a Working Capital Advance – Fast. Simple.

Small Business Loans | Business Funding | World Business Lenders ...

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$5,000 minimum; $2,000,000 maximum; $150,000 average loan size; 6-month minimum term; 36-month maximum term; No minimum credit score; Daily or ...

State Small Business Credit Initiative - Kansas Department of Commerce

www.kansascommerce.com › ... › Business and Community Finance and Incentives

Under the Kansas Capital Multiplier Loan Fund, businesses can apply for ... Kansas Capital Multiplier Loan Fund is $25,000, with a maximum loan of $500,000.

[PDF]Available Funding in Aitkin County

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To provide gap financing for new or expanding businesses. Maximum loan limit is. $200,000. The term and interest rate are based on the type of project, use of ...

Business Ready Community Grant and Loan Program - Wyoming ...

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Home; Community Assistance; Infrastructure Development; Business Ready .... Managed Data Center: $2,250,000 maximum (grant amount is determined by ...

Business Loan Fund | Region10

www.region10.net/blf/

Over the past 30 years, Region 10's Business Loan Fund (BLF) has assisted ... or more, with fixed rates and for loans with a maximum term of 10 years or less.

Funding – Leavenworth Main Street

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Available to LMS Business Members in good standing; 0% Loan, payable over 1 – 2 years; 1:1 match required; $2,000 maximum public funding; $2,000 ...

Business Opportunities Fund (BOF) - PA Department of Community ...

dced.pa.gov/programs/business-opportunities-fund-bof/

Funding. There are no minimum or maximum loan sizes. Eligibility. Any small business may apply, but the program will give priority to small businesses requiring ...

401(k) Business Financing | Guidant Financial

https://www.guidantfinancial.com/financing-solutions/401k-business-financing/

With 401(k) business financing, formally known as Rollovers for Business Start-ups, you can use ... Rollovers for Business Start-ups maximum funding amount ...

[PDF]02/20/2017, Business Funding Resources FUNDING RESOURCES ...

https://caledoniamn.gov/wp-content/uploads/2017/01/FundingResources.pdf

Feb 20, 2017 - MINIMUM / MAXIMUM. RATE / TERM. FEES. Houston County EDA Acquisition of land, building, subject to project. Revolving Loan Fund.

Small Business Funding for Ohio - BUZGate.org

www.buzgate.org/8.0/oh/fh_finsource.html?cb=ibm

Provides small loans ranging from under $100 to a maximum of $25,000 to prospective, smallbusiness borrowers and backed by the US SBA. Service Area: ...

NIH Small Business Innovation Research (SBIR) and Small Business ...

https://sbir.nih.gov/

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, also known as America's Seed Fund, are one of ...

Business & Grants | DOJ | Department of Justice

https://www.justice.gov/business

Oct 20, 2016 - There are many ways to partner or do business with the Department of ... businessesand HUBZone certified businesses have the maximum ...

Financial Jargon Guide: Business Funding Terms | Lendr

https://lendr.online/blog/financial-jargon-guide/

Aug 23, 2017 - Understanding business funding language and financial jargon can mean ... Maximumloan amounts often span from $350,000 to $500,000, ...

City of Chicago :: Small Business Improvement Fund (SBIF)

https://www.cityofchicago.org/city/en/.../small_business_improvementfundsbif.html

The Small Business Improvement Fund (SBIF) program uses Tax Increment ... up to half the cost of remodeling work, with a maximum grant amount of $150,000.

Limits & Thresholds | New York City Campaign Finance Board

https://nyccfb.info/candidate-services/limits-thresholds/2017/

If an individual contributor has business dealings with the city at the time their ... Doing Businesscontributions are not eligible for matching funds and do not ...

Energy Efficiency Fund - SW Colorado Economic Development ...

www.scan.org/index.php?energy-efficiency-fund=yes

The Energy Efficiency Fund (EFF) is part of Region 9's Business Revolving Loan ... If funding needs are greater than the maximum, Region 9 does work with ...

Small Business Revolving Loan | CMSMS Site

horseshoefoundation.org/index.php?page=revolving-loan

The Foundation formed a Small Business Revolving Loan Fund in 2008 to give ... Loan amounts will range from $5,000 to $50,000 with a maximum interest rate ...

Finance Programs for Business - Baltimore County

www.baltimorecountymd.gov › ... › Do Business › Finance Programs

Dec 19, 2016 - The Small Business Loan Fund provides real estate and fixed-asset ... The maximumloan amount is $1 million, or 40 percent of the project cost ...

Tools for Financing Your Wisconsin Business - Forward Wisconsin:

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Developed as a joint venture between Wisconsin Business Development and the ... WWBIC offers small business loans with a maximum loan amount of $35,000 ...

Small Business Loans for Women | Financing Women's Business ...

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Apply for our woman-owned small business loans and reap the benefits! ... completely up to you how to use the funds for the maximum benefit to your business.

Business Loans from Navy Federal Credit Union

https://www.navyfederal.org/products-services/business-services/loans.php

Get the funds your business needs and catapult your company to success with a ... BusinessChecking Line of Credit (CLOC) - up to a maximum of $15,000.

Quadriga Coin Exchange | Account Funding and Withdrawal Options

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Daily Limits, Time Frame, Fees, Verification, Currencies. Electronic Funds Transfer, Min $250, Max$10,000, 5 Business Days, 5%, required. INTERAC^® Online ...

Access to finance - Your Europe - Business - Europa EU

europa.eu/youreurope/business/funding-grants/access-to-finance/

EUROPA - The EU supports entrepreneurs, businesses with business loans, government grants, microfinance and equity funding.

Business Funding Process FAQs - Biz2Credit

https://www.biz2credit.com/about/faqs

Find the answers of the most frequently asked questions regarding loan types, application process and much more.

[PDF]A Guide to Women- and Minority-Owned Business Funding ...

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2 | Page Women- and Minority-Owned Business Funding Opportunities ...... SBICs can borrow three times their private capital to a maximum of $113 million.

PayPal Working Capital

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*The maximum loan amount can be up to 25% of your annual PayPal sales, and no ... PayPal Working Capital makes it easier for your business to get funding.

New Rules of Getting a Small Business Loan | Inc.com

https://www.inc.com/guides/201106/small-business-loans-new-rules.html

Jun 29, 2011 - It would be an understatement to say small business lending has ... According to a 2011 SBA report, the total value of small business loans in 2010 was ... also raising the maximum loan amount to $5 million, the 7(a) loan was ...

Small Business Loans - Mercy Corps Northwest

https://www.mercycorpsnw.org/business/loans/

If you are looking for funding for your business, let's talk. ... as little as $500 to as much as $50,000 (for start-up businesses, maximum loan amount is $20,000).

Restaurant Startup Loans | Restaurant Funding

https://www.webstaurantstore.com/article/74/restaurant-startup-loans.html

5 days ago - In fact, the majority of banks offer their small business loans through a ... 7(a) loans can be granted in a maximum amount of $350,000 and are ...

How to Get Money to Start a Business - 8 Startup Financing Options

www.moneycrashers.com/money-start-small-business-financing-options/

Need money now to launch your new small business? ... For loans up to $150,000, the SBA may guarantee a maximum of 85% of the loan; that falls to 75% for ...

Small and Veteran Business Programs - Office of Small ...

https://www.va.gov/osdbu/programs/

Aug 7, 2017 - Learn more about Veteran and Small Business Programs in the VA ... Goals for VA Small and Veteran Business Programs are aggressive and aimed at maximum ... Find out what SBAfunding is available for small businesses.

Small business - Individual 401(k) | Vanguard

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Maximum tax deductible employer contribution is 25% of compensation. Deductible as a ... Investment choices, More than 100 Vanguard mutual funds. Eligibility ...

Small Business Administration SBA Loans | Chase Business Banking

https://www.chase.com/business-banking/small-business-administration-sba-loans

As a Small Business Administration (SBA) preferred lender, Chase can ... Up to 40% or $5 millionmaximum funded by the SBA; Pricing: Favorable pricing; fixed ...

Online Small Business Loans and Funding | Strategic Capital

https://capitalwithstrategy.com/small-business-loans/

Aug 9, 2017 - We want to see your business soar to it's maximum potential and view our fundingproducts as a valuable investment for your business' future.

Sources of Business Funding | Chron.com

smallbusiness.chron.com › Money & Debt › Funding a Business

... external resources. The type of business you operate has an impact on your funding . ... Themaximum loan amount under the micro-loan program is $35,000.

Best Working Capital Loans for Small Businesses of 2017 ...

https://www.valuepenguin.com/best-small-business-working-capital-loans

Having enough working capital is essential to managing your business's daily ... You can borrow up to 18% of your sales in the past year, up to a maximum of ...

SEC.gov | SEC Adopts Rules to Permit Crowdfunding

https://www.sec.gov/news/pressrelease/2015-249.html

Oct 30, 2015 - The final rules, Regulation Crowdfunding, permit individuals to invest in ... on issuers for certain information about their business and securities offering, ... Permit a company to raise amaximum aggregate amount of $1 million ...

Financial Resources - Finance Resources

https://www.montgomerycountymd.gov/Biz-Resources/services/finance.html

Eligible new businesses will receive a one-time grant upon signing a ... Program assistance typically ranges from $5,000 to $100,000, with maximum terms up to ...

[PDF]Small Business Funding - Philadelphia Bar Association

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Small Business Investment Company Program. - What is .... SBA Guaranteed Loan Program makesfinancing ..... Loans s $10,000 = Cost of Funds + 8.5% (Max).

Small Business Research Loan | North Carolina Biotech Center

www.ncbiotech.org › Funding › Business Loans

Jul 1, 2017 - Home › Funding › Business Loans › Small Business Research Loan ... MaximumAward: ... Business inception and related activities intended to help the company position itself for startup or early-stage funding or partnering.

Small Business Funding | ABASD

https://www.abasd.org/small-business-funding

Small Business Funding Resources As ABA members and partners, several organizations provideloans and other forms of ... Maximum loan is $250,000.

[PDF]A Guide to Small Business Funding Opportunities and Incentives

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Small Business Funding Opportunities Guide ... Small Business Loans . ...... loan, the maximumSBA guaranty on the combined loans can be up to $1.75 million ...

Small Business Grants - A Guide to Free Business Funding ...

https://www.lendgenius.com/blog/small-business-grants/

May 15, 2017 - Because it's not a loan, with small business grants, you won't have to .... Child care homes can receive a maximum of $5,000, while homes can ...

Beginning Farmer Funding Sources and Financing Options | Center ...

https://www.cfra.org/resources/beginning_farmer/fundingsources

Some require management courses or business plans (a good idea for any investment) ... With this $500,000 cap, the maximum FSA loan amount is $225,000.

Best Alternative Small Business Loans Review - Top Ten Reviews

www.toptenreviews.com/business/articles/best-alternative-small-business-loans-review/

Nov 18, 2016 - Alternative business loans are generally smaller than conventional bank loans, with available amounts starting as low as $2,000 and maximum ...

Small Business Loans From New Online Lenders Charge Huge ...

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Jul 19, 2016 - Traditional banks have reduced small-business loans by 20% since the financial crisis, according to a 2014 Harvard Business School study.

Business Grants & Loans - Rockville Economic Development

rockvilleredi.org/choose-rockville/business-funding-and.../business-grants-loans/

One-time grant to businesses that are relocating or expanding from outside ... amount ranges from $5,000 to $100,000, with maximum terms up to 5 years.

Grants For Small Business [Free Government Money]

www.gofreegovernmentmoney.com/grants_for_small_business

May 18, 2017 - Small businesses employ more than half of the people working in ... Grants are awarded for a minimum of $2500 and a maximum of $500,000.

Business Loans - Consumer Affairs

https://www.consumeraffairs.com/business-loans-and-financing/

Compare the best business loans and financing companies using expert ratings and consumer reviews in ... Short-term loans last for a maximum of three years.

Small Business Administration - Wikipedia

https://en.wikipedia.org/wiki/Small_Business_Administration

Jump to Fixed Asset Financing Program - The 504 Fixed Asset Financing Program is ... increased themaximum size of these loans from $2 million to $5 ...

North Lanarkshire Council - Business grants and loans

www.northlanarkshire.gov.uk/index.aspx?articleid=619

May 25, 2017 - Business Loans Scotland [1Mb] provides gap funding to businesses that ... New start-up businesses can only apply for a maximum of £50,000.

Small Enterprise Economic Development (SEED) - University at Albany

www.albany.edu/seed/

Maximum Loan = $35,000. The program was developed to ... funding or for expanding a businesswhere financing is difficult to obtain. Provide economic growth ...

Funding & Banking - SureTrader

https://www.suretrader.com/trading-fees/funding-banking/

Available Currencies: USD. Est. Transaction: 1 Business Day. Maximum Funding: $2,500. Processing Fee: 3.5%. Availability: World Wide ...

VA Business Loans - SmartAsset

https://smartasset.com/mortgage/all-about-va-business-loans

Apr 14, 2017 - VA business loans support veterans interested in running their own ... Interest rates are set at 4% and the maximum loan amount is $2 million.

Small Business Loans: 5 Question to Find Your Best Fit - BlueVine

https://www.bluevine.com/small-business-loans-5-questions-to-find-your-best-fit/

5 Questions to find the best financing for your business in a handy, interactive ... When otherfinancing types talk about a credit line, they mean the maximum ...

Certified Capital Companies (CAPCO) Program | Colorado Office of ...

https://choosecolorado.com › Doing Business › Incentives & Financing

The program encourages new business development and expansions of ... is the maximum level offunding that a CAPCO can provide to a Colorado business?

State Small Business Credit Initiatives - Finance Authority of Maine ...

www.famemaine.com/business/.../business-loans/state-small-business-credit-initiatives/

State Small Business Credit Initiatives funds can be used by businesses at every stage ... Regional Economic Development Revolving Loan Program (maximum ...

Business Funding – Dealey Media International

dealeymediainternational.com/business-funding/

Providing Alternative Business & Real Estate Funding – $350million + ... to DMI's funding folks in order for them to approve us for their maximum line of credit.

Export and Local Financing for Small Businesses - BizFilings

https://www.bizfilings.com/toolkit/.../export-and-local-financing-for-small-businesses

To encourage lenders to make loans to small business exporters that they might ... they've also increased the maximum loan under this program to $250,000, for ...

Business Oregon IFA | CDBG Program - Infrastructure Finance

www.orinfrastructure.org › Infrastructure Programs

HUD Section 3 Business Registry Brochure English PDF; HUD Section ... The following are themaximum grants possible for any individual project, by category:.

[PDF]Funding small businesses through the SBIC program;

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by EB Ill - ‎Related articles

ter private small business investment compa- nies (SBICs) to .... over small business financing is how the char- ... tion, the maximum amount of SBA funds that.

Financing Your Business | BIDC

www.bidc.org/entrepreneurs/preparing-business/financing-your-business

Technical assistance grants up to a maximum of BDS$40,000 per business are available to fund pre-investment audits and studies to assess the feasibility of RE ...

Financing - Capital Access Group

capitalaccess.com/financing/

90% financing – Preserve working capital for business growth and ... Note this is the max for the SBA portion of the loan only; there is no max project size.

50 Ways to Find Funding for Your Business - Google Books Result

https://books.google.com/books?isbn=0857192906

Emma Jones - 2013 - ‎Business & Economics

Platform Max investment level Equity/Loan Fees Keep funds if don't hit Sector focus IReward target? Buzzbnk Suggested amount between Loan and 5% No ...

Business in Focus - Business Funding for Starting a Business or ...

www.businessinfocus.co.uk/funding

Business in Focus delivers a range of funding options to help you start a ... grant and can provide up to 50% of eligible project costs to a maximum of £500.

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