Helping small business navigate business lending alternatives

8 Feb, 2014 | Articles

In what now seems like a weekly occurrence, another innovative start-up focused on small business lending has received funding. Fundera is aiming to navigate the world of non-bank funding for small business.

Non-bank funding to small business has been growing at extremely fast rates in the US and UK in recent years with many players entering the market and filling the gap left by the Banks. Traditionally funding from these sources is expensive and can have non-commercial terms. As the market matures, it is expected that the cost of credit from these players will continue to come down as (1) the cost of funding for the small business lenders decreases (with scale and proven default record) and (2) ethical players take a larger share of what has traditionally been a “murky” and at times “ethically challenged” market.

There are many stories from small business customers of getting into difficulty with non-bank lenders providing small business loans – stories covering the gamut from paying large application fees and never receiving funding through to hidden fees and charges that add up to much more than the headline rate on the loan.

A service such as Fundera should help accelerate the development and scale of the small business lending space by helping small business owners navigate which credit providers are trustworthy, facilitating a like-for-like comparison of all in costs and facilitating the best result for the small business owner based on their particular characteristics. This is ultimately good for the whole non-bank small business lending market – (legitimate) funders as well as small businesses themselves.

Fundera is definitely one to watch out for.