Lending Express is making quick work of getting a business loan
The LendingScore platform helps businesses lift the lid on getting approved for a loan.
With the recent rise of alternative business finance options, including marketplace and online lenders, it's never been a better time to be a business looking for a loan. But if there's anything more frustrating for small businesses than being rejected for a loan, it's the sense of uncertainty that often follows.
While failing to find finance can be a setback for any business, it's the lack of practical feedback that leaves some SME owners out in the funding wilderness. For Lending Express, solving this issue is their very reason for being.
"We created the marketplace in order to have competition between lenders here [in Australia]. For the most part, the lenders here are taking on the same type of clients, so we wanted to find a way to get the right types of clients to the right types of lenders, and also make sure that each vendor is offering the absolute best deal it can," says Shuli Mantsur, director of partnerships at Lending Express.
The Israeli financial startup, which is still based out of Tel Aviv, has recently expanded to the US, but launched initially in Australia in 2016, as the local market presented something of an interesting test case.
By matching business borrowers with appropriate lenders, the startup aims to take the pain out of business finance and improve outcomes of all parties in the process. The company has since facilitated $117 million in business loans in Australia, a 400% increase over its own projections for the last 12 months.
Knowing the score
But its key product is the LendingScore platform, which launched here last year and continues to be developed. Described by Mantsur as a "nurturing system", the platform offers practical, automated advice on how businesses can be approved for a loan and notifies them once they meet the criteria put forward by lenders on the marketplace.
Businesses can securely link their business bank account, which provides the necessary data around turnover and time in business. Businesses are then matched with lenders that are likely to approve their application. "We really zoom in on each lead. We don't send anyone to a lender if we don't think they have an 80 or 90% chance of funding," Mantsur told Finder.
For businesses that fail to get a loan, they're redirected to a dashboard that details what they need to change in order to be eligible for a loan. According to Mantsur, it's about providing practical and actionable advice that businesses can then address.
"This is how other lenders see you. If you want to be looked at in a better light, here's your to-do list. Everything is broken down. This is your time in business, this is your monthly revenue. People like receiving really specific instructions. You don't want to be told, 'you have to improve the health of your business bank account.' It's just like, 'Oh, great. Let me go get it a shot of penicillin.' I want to be told what's not healthy, and how do I make it healthy.
"Sometimes it's as stupid as the business deposited two times a month, instead of four times a month. And they can deposit four times a month, they've saved up the money, but who wants to go to the bank four times a month? So the LendingScore shows them things like that as well."
Once businesses have addressed the feedback, they receive an automated email with any lender offers that are now available to them.
In comparison to other markets, the Australian business lending space offered its own unique challenges. "If you take Israel as an example, there's a never-ending source of funding for new businesses. It's the startup nation, so it's 'just start, just do it, go start a business'," Mantsur says.
"Lenders here play it very safe and there's a lot of regulation. I understand that it's a model that's proven to work, but the thing is it leaves a lot of merchants out. There's nothing wrong with their business, there's nothing wrong with their model, and they can succeed, but in the first year they need funding.
"We know that businesses struggle, especially in the first year. And right now, one of our main focuses is getting lenders to adopt American practices, which is taking higher risks for businesses that are less than a year in business."
While increasing the risk appetite of local lenders will help improve access to capital for many small businesses, more can also be done to improve the communication between lenders and borrowers, according to Mantsur.
"Right now, what we're working on is getting the actual decline reasons from the lenders, so why they declined, and posting that on each merchant's profile. One of the things that is very prevalent in the industry, not just in Australia, but also in America is that the clients are just told, 'oh, sorry, we can't help you. Bye.' And it's very frustrating."