Strength through adversity: how alternative lending is getting better.

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We have all heard, probably even used the phrase, “one bad apple spoils the barrel.” Alternative lenders have been on the defense of that thinking recently, since a shakeup with Lending Club this past year.

Under investigation for questionable lending practices, a lack of transparency, and personal investments by Lending Club’s founder and then-CEO Renaud Laplanche
that suggested a conflict of interest, the company has taken hits–both financially, and to their once-solid reputation.

A peer-to-peer lender, Lending Club facilitates the borrowing of money of either an individual or business, using an online platform, from either peers or institutional investors. One of many alternative finance companies that have grown from the financial crisis of 2008, Lending Club has been a pioneer in the industry. Moreover, now they have put it on the hotspot.

Experts and lenders within the industry have used the spotlight as a way to both defend alternative lending and strengthen the industry. Ryan Weeks, the editor of an industry standard news outlet, AltFi News, recently said this in his defense of alternative lending on Techcrunch.com:

“Alternative lending (I’ll use this term to encapsulate both the balance sheet and marketplace varieties) is fundamentally about plugging excess liquidity directly into innovative sources of loan origination. The internet acts as the connector, facilitating a more seamless transmission of money.”

It’s because of the internet that these assets can be opened up to a broad range of investors, from thousands of individual investors to a smaller number of institutional investors. But beyond that, the internet also allows for the more intelligent pricing of risk.”

“These statements are supported by the actions of some of the world’s best-known financial services brands, which have been selectively adopting various aspects of the alternative lending model over the past few years.”

What he’s talking about is opportunity made available through technology. When used for good, businesses looking for capital for their operations, entrepreneurs hoping to secure cash to launch their innovative startups, even individuals looking for a financial boost in an insecure time, can access funding quickly, with little paperwork, few hoops to jump through, and without a lot (or any) collateral or even strong credit or stability in business.

Shady practices, like the ones Lending Club is was under investigation for, provide greater shade on the industry as a whole, and that is not particularly fair. However, life is not fair (how many times did you hear that growing up?) and rather than let unethical actions taint the industry, there becomes an opportunity for growth. Namely, focus on transparency.

Writes Ruper Taylor in a post on AltFi, ” Not correctly disclosing full details of what a client is purchasing is a colossal failing in any financial business. But in a disruptive new financial industry, which seeks to set itself apart in the field of transparency, it is unforgiveable.”

However, simply re-regulating the financial reporting of alternative lending companies–closing potential loopholes–is more difficult than penning a few new guidelines; yet herein this difficulty is the real opportunity for growth.

The growing role of analytics

Lending Club has originated over 1.5 million loans, so meaningful analysis, says Taylor, would require “significant computing power.” And because they are originators, not lenders, they’ve used a number of different platforms to provide their services. All things are not equal, so you can imagine the time and energy and analytic know-how from the institutional investors to contribute to meaningful analysis.

AltFi Data has launched AltFi Data Analytics, a tool that’s been two years in the making, to show standardized and comparable metrics for the four largest marketplace lending platforms in the UK.

The good news, says Taylor, is the “developing culture of transparency.” As new architecture is being built to move forward with analytics across the industry, transparency and disclosure are less moving targets and more bulls-eyes.

How to select a reputable online broker or lender

Lending Club might currently be a bad apple, but they have not poisoned the barrel. The industry has grown out of innovation, necessity, and good business practices. Unfortunately, like in any industry, unethical actions happen. Here are tips to find reputable lenders online.

 Look for a secure website with a valid SSL certificate. Look for “https” in the URL and a lock icon, like this one:

 Find a company with professionals who are willing to discuss terms and fees openly with you. If it’s difficult to talk with a live person, or your representative can’t put your terms into an understandable schedule, move on to a company who can. Additionally, don’t allow yourself to be rushed into signing an agreement. You should be free ask as many questions as you need before making your decision.

 Don’t be pushed into borrowing more money than you need. Remain firm on the amount you have calculated and question a borrow who encourages you to borrow more.

 Find the fine print or terms of agreement on your lender or broker’s website. You should be able to locate privacy policies and legal disclosures without having to ask for that information.

Borrowing money is a necessity for any business, and traditional banks are not always to the answer to short-term, quick turnaround situations. Thus the development of the alternative lending industry, helping individuals and business owners reach the funds they need to grow their businesses. And while growing pains sometimes cast a shadow, they help industry leaders make better, more transparent products for the marketplace.


Are you a small business looking for alternative lending options? Talk to the reputable professionals at Lendini, a leading provider of business cash advance, merchant cash advance, and unsecured loan services, about lending options that fit your schedule and budget. Call 844-700-LEND today.

When your small business hits stall mode

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The Thomson Reuters/PayNet Small Business Lending Index (SBLI) released in February 2017 is showing a decline in investment growth for small business, which suggests small businesses are not looking confidently to the future. The index decreased 5 percent from January 2107 to February 2017 and down a whole 4 percent from the same month last year.

A slowdown trend is emerging in the sectors that normally show growth, including retail, construction, and agriculture. It shows finance and arts merely in “maintenance mode.” Where does your small business fit into these index predictions? Have you experienced a slowdown?

The dreaded plateau

When you first start your business, your passion is at its peak. You have a clear business plan, capital to invest, a small team of excited creatives ready to jump in feet first. Though these can be the hardest and longest days, they are also often the most rewarding for entrepreneurs when they see the fruit of their hard work starting to pay off. The business builds and rolls toward profits.

After time, experts usually say when a business reaches the high 6- to the low 7-figure range, there’s a plateau where the rise use to be. Growth slows or stalls. This is when the business, the owner, the core employees show their mettle or run into trouble.

Ways to break through the stall

Passion, expertise, and skill are the foundation for a new business, which builds on an innovative or useful service or product. If those pillars do not change, then why does a business plateau? Moreover, how does a small business owner work through?

Ask tough questions. To pinpoint the cause, ask these questions:

  • Are we doing something wrong?
  • Are customers returning?
  • Have operating costs increased?
  • Is there more competition in our market?
  • Has market demand decreased?
  • Are we spreading ourselves too thin?

Pour over your income statements, run your Google analytics, talk to your customers about their experience and expectations, negotiate with your distributors and partners.

Check your complacency. That initial passion is tough to maintain. Burning the candle at both ends, throwing all you have into making your idea a success takes a lot of energy. Once you feel on stable ground, it is easy, and maybe even necessary, to go into cruise control. Enjoy your success, breathe. Just don’t do it for too long, because on cruise, you aren’t planning your next step.

Consider what you are willing and able to do next. A significant investment of time, money and resources, making difficult decisions about core services and core employees, even going for a time without income are possibilities. How many difficult decisions are you willing to make?

Financial investment is likely a necessity. Securing additional capital to build your technology infrastructure, devote resources to research and development of new services or products, hire new talent, increase your fleet, or jump-start your marketing, can pump new life into a stalling business. It takes planning, control, and risk.

New hires and new fires. Do you need to hire a second tier of managers to grow a product line or diversify your marketing push? Alternatively, do you need to let someone go, who may have contributed to the initial growth of your business, but has been outgrown? Neither are easy prospects.

For new talent, mine your connections through online avenues like LinkedIn, and be ready to offer a suitable onboard package for upper to mid-level managers. This might mean looking for alternative lending options to boost your cash flow, or taking a drastic pay cut yourself to boost the potential new-hire budget. Use online resources like this cost-per-hire calculator or this bad-hire-calculator, which helps you understand the implications of making the wrong pick (as much as $50,000 for one bad hire).

You are an entrepreneur, a small business owner, but not an HR expert. If you have to let, an employee go, do your research first to avoid issues later. However, if the separation is one you deem necessary for the continued growth of your company, make it happen.

Introspection and monitoring are necessities for every business, no matter the size or industry, but small businesses fall more easily into the trap of not seeing the forest for the trees. Working tirelessly on day-to-day issues, focusing on today and not the future, until the future mirrors the SBLIs predictions of a slowdown. The dreaded plateau is inevitable but beatable.

Has your small business hit a plateau? How are you pushing past?

Does the Global Economy Matter to Your Small Business?

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Your small business may operate out of a cozy corner store on Main Street, a nondescript office space in a towering high rise or from a computer on a card table in your spare room. It may feel as if your sphere is small, your market is medium, or maybe the world is just getting to know you. So when institutions like Morgan Stanley start making predictions about the global economy in 2015, should you be paying attention? Does the global economy affect your business?

The answer is yes.

In a recent presentation of Morgan Stanley's annual forecast, economists predicted for 2015 to be "bumpy, below par and brittle." While the U.S. will see relatively strong growth, Europe, Japan and other countries will still encounter weakness, causing an "out of synch" global expansion. They are tossing around words that business owners understand, like inflation, the expansion of the money supply, or more recently generalized as rising prices. Deflation, falling prices, or as many economists say economic poison that causes consumers to delay making purchases.

 

What is Lowflation?

A relatively new term on the economic scene is "lowflation," a situation in which prices are rising, but not fast enough to boost the economy the way inflation does. In European countries struggling with deflation, lowflation is responsible for higher interest rates but less relative price adjustment. Economies are unsettled in a state of lowflation.

 

Why does it Matter to You?

When large, developed nations' creditworthiness–or lack thereof–is questionable, small businesses feel it. Governments have to pay more to borrow more and the trickledown effect is felt in the lending arena, where banks tighten their lending policies. Everything from manufacturing and imports feels the slowdown. Resources from abroad are tighter, strings tighten on lending opportunities. Bottom line is without a reasonable opportunity to borrow, to keep cash flow moving and invest in the future of your business, your business can feel the swing of the global economy.

Based on predictions by economists at Morgan Stanley, if you own a small business, be conservative as the new year progresses, with an eye on the global market for ups and downs.

 

Considering your options for fast alternative lending? Call 844-700-5363 or check out Lendini for information on business cash advance and merchant cash advance solutions today.

 

LENDINI WELCOMES SOLE-PROPRIETORS WHEN OTHERS DO NOT

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As the Merchant Cash Advance industry grows, more and more sole-proprietors are turning to business cash advances to secure working capital.  Sole-proprietors present unique challenges to advance providers because such businesses are very different from businesses organized as corporations, partnerships, and limited liability companies (LLC’s).  A Merchant Cash Advance is designed as a business-to-business (B2B) transaction.  An advance provider such as Lendini purchases future receivables from a business for an immediate cash price.  Its return on the investment is the difference between the amount of the advance and the value of the receivables purchased. 

No matter how small a business might be, if it is organized as a corporation, partnership or LLC, the states and the federal government recognize that business as a separate entity from its owners.  This protects the owner from losing his personal assets if the business sustains a loss – the so-called “corporate veil”.  It also means that a different set of laws apply to the transaction.  Businesses do not benefit from consumer protection laws, are often exempt from usury statutes and are considered by most courts to have a greater sophistication than a consumer would when entering into a contract. 

Sole-Proprietorships, though, are generally not considered to be separate from their owners.  In fact, many states do not even have a means to register them as a business at all.  And while a few states look to the purpose of an advance to determine whether a merchant is an individual or a business, most do not.  When they do not, an advance provider faces significant challenges because, again, the product is designed for commercial, rather than consumer, use. 

Unlike many merchant cash advance providers, Lendini welcomes sole-proprietorships.  Lendini adjusts it underwriting and the parameters of the advance it offers to conform with state consumer protection laws.  While the product is not a loan, Lendini takes care to offer advances to sole-proprietors on term that would pass muster if a court or regulator were to treat the purchase as a credit transaction. 

In conclusion, you do not need to be incorporated to do business with Lendini.  You simply need to be “in business.”  So to those small business men and women who do not qualify for a bank loan and who may not get a merchant cash advance because they are not incorporated, I say look no further.  Lendini is the best match for you.

A Look At Nonbank Lending Through the Years

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"The Great Recession" causes many a hearts to flutter, still. In the wake of that debilitating economic time, officially from December 2007 to June 2009, the $8 trillion housing bubble burst, consumer spending declined, business investments collapsed and the U.S. labor market lost $8.4 million in jobs. Many acknowledge the rise in alternative lending solutions to the recession out of sheer necessity. Banks weren't doling out any money to startups or small businesses. There wasn't money to lend.

 

That's actually a myth, says Dailyfunder in a recent article. "Small businesses seeking less than $150,000 have been underserved for decades." Nonbanks have not been in the business of stealing customers away from traditional banks, rather they've been trying to serve a market that was otherwise ignored.

 

Technology Brings Opportunity

One of the barricades to nonbank lenders was technology. Pre 2010, before APIs and algorithms, nonbank lending and merchant cash advance processes were powered by human labor. As technology has blossomed, Dailyfunder notes the growth of financial companies using daily payments throughout the years:

1998    $9,000,000

2010    $524,000,000

2014    $4,500,000,000 (estimate)

You may recall a familiar tagline that gained fame in the mid-90s by Joseph Goryeb, "When your bank says no, Champion says yes." Nonbank funding options have been a big yes for small business for decades. At the moment there might not be a headlining catchphrase, but online lenders like Lendini are saying yes through merchant cash advance and business cash advance options. Possibilities for start-ups who can't qualify for traditional loans, businesses with less than perfect credit, and merchants needing a small, quick boost in cash flow exist, and are growing. There is a faster way to fund.

 

Learn more with Lendini. Call 844-700-5363 or visit online today.

Independent Workers on the Increase in the U.S.

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The number of independent workers in the U.S. has been projected to grow from nearly 30 million today to 40 million in 2019, according to the 4th Annual State of Independence Report by MBO Partners, a firm that provides office support to independent workers. What's an independent worker? MBO Partners defines them as consultants, contractors, freelancers, temps, on-call workers, self-employed, "side-giggers," and small business owners who employ fewer than four employees. "Side-giggers" is the newest addition to the independents list, also known as those who work less than 15 hours a week.

 

Whether working towards financial independence, supplementing a salary or transitioning to shorter work day or work week, people who make the plunge are doing so on their own account, according to MBO Partners, who found that only one in seven independent workers chose that lifestyle due to layoff or illness. As this trend develops, businesses will need to further adjust to accommodate and incorporate independent workers into the workforce, and lenders will need to extend more opportunities to fund the ambitions of the growing number of self-employed.

 

Independents: Who and Why?

The picture of an independent worker is increasingly showing older Americans, with 44% of the current independent workforce over 50, boomers, even workers into their late 60s. Financial stability, a well-developed expertise and established networks for referrals lead employees from full-time positions. Also, independent work fits into lifestyles versus a professional fitting his or her desired lifestyle into a traditional job. With independence comes autonomy, flexibility and control.

 

For businesses, hiring freelance or consulting folks can lower overhead costs. It reduces salary and benefit costs, can reduce the amount of physical space and office supplies needed. Workforce size can increase or decrease depending on workload.

Ultimately, it's about satisfaction. The study reports 82% of responders being satisfied, despite worries over workflow, consistent earnings, job security and retirement concerns.

Taking the plunge depends on resources, like this How-to Guide to Starting a Side Gig After 50, confidence, a solid network, and a plan. How are you preparing to join the 30 million independent workers?

When Technology Overwhelms Small Business

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Everyone has uttered it: “I love technology. When it works.” Networks, connectivity, apps that tie all of your information into one convenient place, they’re all terrific when they function properly. But when there’s a misfire and suddenly you can’t access your information, you can’t communicate with clients or your website has gone funky, technology becomes the enemy if you can’t fix the problem in a hurry.

Small businesses are often sans-IT departments. Many can get by with the office computer “expert” who enjoys toying with them on the side. But what to do if you encounter a problem bigger than the typical reboot can handle? What are your options?

IT Options for Small Business

  • Call the manufacturer’s technical support number. This may be your first move, as the technical problem might be a simple redirect. On the downside, it’s sometimes tricky to translate the manufacturer’s instructions into reality and solutions often include a program re-install, causing costly downtime and the loss of company data.
  • Utilize the skills of an intern from a nearby college or university. A potential win-win for your organization while you draw on the newly-learned and most up-to-date information; however a student’s learning curve may slow your company’s return to functionality.
  • Work with big box retailers like Best Buy’s Geek Squad or sidle up to Apple’s Genius Bar for tech support. Quick access and face-to-face interaction are the pros to this approach, but the revolving door of less-than-qualified technicians does not lead to relationship building, so the next time you have an issue, you’ll likely start all over again.
  • Partner with an IT Consulting firm. Having local, knowledgeable collection of professionals whose business is to provide IT service to small businesses is a safe and reliable answer to keeping your IT systems up and running. Of course contracting such services is a cost that may or may not fit into your operating budget.

Technology can make or break productivity. When your business is your expertise, not the software and hardware, networks and apps that keep it running smoothly, technology downfalls will cost you money and open you up to security breeches, viruses and spyware infections.

Looking to establish a reputable IT consulting partnership, or to invest in the latest technology for your business? Contact Lendini about alternative lending options to increase your cash flow in just a few days. Call 844-700-5363 today.

Online Lending Applications on the Rise

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Inherent in the word tradition is the ongoing pull to do things the way they've always been done. Think holidays and family vacations. They are prescribed ways of thinking and acting based on a long history. If you're launching a small business, however, tradition may get in the way of innovation. Small business loans are no exception.

Traditional loans are still alive and viable. Just recently Wells Fargo committed to offering $1 billion in traditional loans to small businesses in the U.S. by 2018. Also, the SBA is making traditional small business loans easier to obtain by guaranteeing a portion of those loans, making them more attractive to financial institutions. These are great steps forward in support of small businesses growth. However, borrowers still need to meet many qualifications to be eligible, like having excellent credit, offering collateral or meeting size requirements. And borrowers still need to apply and wait–sometimes weeks–for approval.

 

Statistics = Validation

Across the board, online lenders are reporting increases in lending requests. In 2013, overall nonbank lenders loaned about $3 billion to small business owners, and requests for loans are rising steadily, according to an article in Bloomberg Businessweek. Companies like Amazon, PayPal and Square are growing their merchant cash advance programs, a validation that big companies are entering the small business finance arena.

Leaders of online and non-bank lenders say their adroitness in the funding arena make non-bank funding so popular. A lender's ability to make quick decisions and the streamlined paper trail during the application process are positives customers appreciate. Services like the ones Lendini offers help small business owners increase their cash flow without having to wait weeks, like they would through a traditional bank loan.

 

Be ready for cutting edge opportunities as they come. Be innovative. Call 844-700-5363 or complete the online application for a free quote.

Factoring and Cash Advances: What’s the Difference?

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Applying for quick cash–whether through a small business loan, cash advance, or other alternative funding source–brings about new terminology. Of course there’s the annual percentage rate or APR, basically the cost to you to borrow money. When borrowing or accessing a loan, a company can either incur a payback schedule, like with a cash advance or outsource management of accounts receivable through factoring.

What is Factoring?

Factoring is a financial transaction in which a business sells its accounts receivable to a third party commercial financial company at a discount. A business will sometimes factor its receivable assets to meet the cash needs most present and immediate. Maybe a vital piece of equipment is down or there is damage to a building not covered by insurance or a too-good-to-pass-up opportunity comes along to enhance business growth. Any of these scenarios may lead to a more urgent need for cash approval.

Advantages and Disadvantages of Factoring

Also known as “accounts receivable financing,” factoring is done so a business can access cash more quickly than it would waiting 30-60 days for a customer payment. A factoring company purchases your invoices and advances you funds in as little as 24 hours. Often a business can get up to 80 to 95% of an invoice amount depending on the industry and your customer’s credit history.

A few disadvantages include giving a factoring company access to managing your accounts receivables. Customer disputes are potentially more worrisome and should be settled quickly to avoid issue with the factoring company. Also, a factoring company can apply credit limits to your customers, potentially affecting business relationships.

Cash Advances

An advance on future earnings differs from factoring because you are responsible to pay back funds you have borrowed over time based on a percentage of future sales. Cash advances are also quick and easy to apply for, putting funds at your fingertips for capital investments, the ability to repair equipment or to hire employees.

 

Learn more about cash advances for small businesses at Lendini.com.