Not Your Average Small Business Loan

Small-business lending has been stuck in a slow, grinding recovery behind most other types of business and consumer loans. Traditional lending options still lack the flexibility needed to support the current state of a small business. Banks continue to struggle to find profitable ways to lend to small businesses due to strict regulations. Meanwhile, online services like Kabbage, Square, and Lending Club help fill the void, but at what cost?
These loans can be very expensive and are likely best suited to small-business owners who need a short-term funding solution and have nowhere else to turn for funding. Let’s review the cost of some of these lending options:

Kabbage — A simple access to a line of credit today. The longest repayment term available from Kabbage is six months, which is a far better option than a payday loan with a term of two weeks, but Kabbage is not so different once you consider the annual percentage rate (APR). An average Kabbage risk score and credit history would earn the small business an annual interest rate of 24% on the loan.

Square Capital —  The mobile payments platform aims to help small businesses grow by creating a merchant cash advance that requires the borrower to pay a percentage of daily sales and with no deadline. Ironically, the better a business does, the more expensive the advance becomes. A $10,000 advance from Square requires a payment of $11,300 in total. Over 12 months that is an annual percentage rate of 13%, but pay off the loan in 4 months and the APR rises to 39%! Repaying the advance faster makes the money more costly compared to fixed payments.

Lending Club — An online financial community that brings together creditworthy borrowers and savvy investors helps provide access to individual business owners, but still carries the risk of understanding the terms. Lending Club offers a range of “rates from 5.9% to 25.9%.” However, they go on to say, “Best interest rate available to borrowers with excellent credit and financial strength.” While repayment terms are as lengthy as five years, origination fees range between .99% and 4.99%.

The first wave of scalable lending solutions has come with shackles attached. These sites offer speed, convenience and relatively loose qualifications for a business loan, but in return you will likely pay a high annual percentage rate on the debt. As small-business owners consider options for working capital, one should carefully weigh the potential benefits and costs before making such a costly decision.

“What if there is another way to lend to small businesses that need capital at an interest rate that challenges the status quo?”

We believe that small business owners are the unsung heroes in communities and deserve a better solution that enables their business to flourish. Every day, these hard-working business owners struggle to identify adequate sources of capital.

Our Growth Loan celebrates people with great character and ideas by providing access to funds to grow your business. We have built an accessible loan product without the headaches and requirements that are normally associated with credit approvals. Learn more about our Growth Loan product:

Grow — Our loans provide small businesses the capital needed for growth. We offer up to $35,000 for businesses to increase inventory, buy equipment, or on anything else that a business might need to flourish.

Relationships — A personal review process builds relationships with business leaders that want your business to succeed. We will support your business by providing insight on opportunities to grow rather than focusing solely on a critical evaluation.

Time — We know owners of small businesses have limited free time. Our process is based on a four-week cycle that provides the greatest value and efficiency to business owners needing capital.

Cost — We refuse to offset risk with high-interest rates. Instead, we address risk during the review process through character endorsements and personal interviews. Unlike online services, we provide interest rates that are at or below market.

Our Growth Loan for small businesses looks beyond your credit scores, financial collateral, and initial sales patterns. These historical methods of evaluation should not be done away with, but history has proven that evaluating small and large businesses, in the same manner, limits the flow of capital to these valuable components of our communities.

Access Ventures is committed to supporting solutions that increase access to capital for small businesses so we’ve seeded our revolving growth loan fund with $250,000. We have helped support small business like Misc. Goods Co., Bellweather Solutions, US Chia Seeds, and more.

If you’re interested in applying for the Growth Loan, visit the Growth Loan website to fill out an application.