Years ago, when small business owners were denied traditional loans from banks, their options were limited. Increasingly, however, new startups are seeking to change that.
Jared Hecht wants to be a part of this movement. As the founder of Fundera, a marketplace for small business loans, Hecht's goal is to help businesses expand when they have no other viable ways to raise the capital.
According to an article on CNN Money, Hecht cited the experiences of his brother-in-law as formative of his views on loans. As a restaurant owner, his brother-in-law sought a loan to open a third location, but failed to secure the funds.
"I didn't understand why he couldn't get a loan from a bank," Hecht told the news source. "Both locations were very successful. They did $700,000 in Ebitda every year."
This is indicative of the industry as a whole. As pointed out by an article on Tech Crunch, the number of bank loans worth less than $1 million issued during the past five years has fallen by more than 20 percent.
The idea behind Fundera is that small business owners can use the platform and its common application to get matched up with potential lenders. Hecht insists that this process is much shorter than that run by traditional banks.
The vetting process is crucial to a startup like Fundera because of the inherent risk involved in lending to small businesses. Though this company seeks to position itself as a better option for borrowers, it is still important for it to use credit management software to determine who is a safe bet.