With Lendio’s sophisticated online marketplace, business owners complete one application for access to 75 potential funding sources – and receive an offer within hours.
By Eve Gumpel, California Business Journal
CEO Brock Blake proudly calls his company, Lendio, “the nation’s leading marketplace for small business loans.” To date, the company has funded about $850 million in loans, helping more than 40,000 business owners across the U.S. Blake says Lendio is on track to reach $1 billion in loan volume in the next few months.
But the company was far from an overnight success. Blake and co-founder Trent Miskin’s journey was filled with pitfalls en route to finding the perfect solution. It all started in 2005, after Blake won $50,000 in a competition with 100 would-be entrepreneurs. He used the winnings to start FundingUniverse to connect entrepreneurs to angel investors, venture capitalists and other private investors.
“It was a great learning experience,” he says. “It was kind of like a dating website: you’d post your business plan and investors would come and determine whether to invest in your business.”
However, he adds, “I realized very quickly that most business owners are not going to raise angel or investor capital.”
And Lendio was born.
Still, Blake and Miskin had obstacles to overcome. The first was small community banks.
“Community banks are very interested in lending,” Blake says, “but the problem is that they have a very, very small footprint – one or two ZIP codes.”
They also have stringent criteria: they only want to lend to companies that have been in business three years, have really strong revenue, good credit and collateral for the loan.
“There weren’t that many businesses that met the banks’ criteria in that small footprint,” Blake says.
The advent of non-bank lenders (online marketplaces) solved that dilemma. The online lenders had the ability to lend to businesses that didn’t meet the community banks’ criteria. “That’s when we started to figure out how to expand Lendio,” Blake says.
The Lendio process itself was still an obstacle, however. Initially, when a business met a particular lender’s criteria, Lendio sent that referral to the lender. That put Lendio at the mercy of the lender.
“We were dependent on the bank’s ability to get ahold of that customer, interact with the customer, and gather the full application,” Blake says. “It was also putting the business owners into a situation where they could have three or four lenders reaching out to them at same time, which isn’t always the best experience.”
Blake realized that Lendio needed to take charge of the entire process. “That was the key change that allowed us to grow and help businesses across the country,” he says.
Now the business owner comes to Lendio, completes one application, works with a funding manager – and gets access to up to 75 lenders who compete for that company’s business.
“We’ve gone out and built the tech that takes all of the data that we have on the borrower and all the data the lenders have given us about their underwriting criteria, and recommends the top three to five lenders that are the best fit for the borrower,” he explains.
“Maybe we sent it to five lenders, and three of them gave us an offer. Then we’ll present those three offers to the business owner in a way that they can comparison shop the rate, the return, the payment amount and decide which product is the best fit for them. That puts that business owner in the driver seat. It does make it significantly easier for both the lender and the borrower.”
It takes only minutes to fill out a Lendio application – “and we usually have an offer back to you in a couple of hours,” Blake says. The average loan size is $30,000 to $50,000. What’s more, a funding manager is assigned to each business owner to answer questions. Blake calls it “a white-glove-type customer experience to help that business owner understand the product and make decisions around it.”
Lendio’s lenders include American Express and Bank of America, along with such non-bank lenders as On Deck Capital, Kabbage and Lending Club.
“It’s not a job for me — it is a passion,” Blake says. “Our key value proposition is fueling the American dream. There are millions of business owners out there that have some dream to expand their business. They just need the capital to be able to make it happen.”
Blake has big goals for Lendio. “Just as you think about other marketplaces, like Expedia, or Kayak or Yelp – I hope that we are the most recognizable and used brand for small businesses.”
In two or three years, he also hopes to be doing $1 billion in loans annually.
Blake’s most immediate objective is to create brand awareness. To that end, Lendio has formed partnerships with companies such as Comcast Business and Staples that can offer loans to their clients through Lendio.
Lendio also launched a franchise program in 2017, led by Chief Franchising Officer Ben Davis. Franchisees offer a “face-to-face, belly-to-belly option” for those who prefer a personal connection rather than “a faceless website,” as Davis puts it.
Says Davis, “Lendio’s goal is to have it your way.”
Franchisees also hold events from lunch and learn to pitching opportunities, where borrowers get an opportunity to pitch their business to several small business lenders.
Like Blake, Davis loves helping small business owners get the funding they need. “It’s easy to stay up late working and get up the next day looking forward to work,” he says.
Lendio is actively seeking franchisees, but California poses some legislative complications. “We’re working with the Department of Business Oversight to figure out how we make the franchise regulations work with the California financial lender law regulations,” Davis says. “The 30-year-old law didn’t comprehend online lending and marketplace lending, and it never comprehended these two worlds of lending and franchising coming together.”
Like Blake, Davis is also highly passionate about what he does. “It’s one thing to look at growth charts. It’s so much more fun to talk about the sewing machine company where the facility burned down … and we were able to find them funding, and they’re back in business and doing well.”
Says Blake: “We’re not just selling widgets. We are making an impact on business owners. That’s what gets me excited every morning, gets me out of bed. What kind of economic impact are we going to have on the U.S. because we’re helping these small business owners?”
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