Smaller businesses get a helping hand with credit ratings

Getting investment in a large idea or large business could be tough, but is possible. Then there are the smaller businesses that all of us use that aren’t the “big idea.” A new startup called OnDeck is intending to help these 5 million companies qualify for loans more effortlessly.

Loans for small businesses harder to come by

For many smaller businesses, qualifying for loans can be a challenge. Businesses without a credit history or business history sometimes have a hard time getting loans from financial institutions. Loans for amounts less than $100,000 are often considered not worth the work it takes to vet a full business with the standard 14-item business loan package. Faced with these two realities, several owners of companies with fewer than 25 employees end up using their personal credit to secure financing. This could be dangerous since all the risk is there for the business owner and is tied to personal accounts.

Answer with OnDeck

Cloud-based and interlinked, OnDeck aims to streamline the creation of financial reports and information for lenders. Companies input their business profile, link the profile to their online banking, accounting and credit-card processing accounts. The full financial profile, business credit report and prospectus is created with the information as well as industry data, regional information and tax data. It took five years to get the system put together. Now it creates reports that big businesses want to see. The reports also provide more real-time information than banks currently use, hoping to streamline the process for loans between $5,000 and $150,000.

Businesses can have even more

OnDeck provides new financing resources for small businesses, but it isn’t the only new resource for getting small business credit. Small company owners are able to start up a business with some help from StartUp America also, which is a new government partnership. The SBA also provides loan guarantees, counseling and information for small business owners. Business owners wanting to use other resources may have them accessible. Just try to find them.

Citations

Tech Crunch

techcrunch.com/2011/05/19/smart-lending-on-deck-gives-your-startup-a-credit-score-so-you-can-secure-a-loan/

Startup America Partnership

startupamericapartnership.org/