American Express's new business program, Open, offers promising financing options to start-ups and smaller businesses.
For the majority of entrepreneurs -- especially the owners of start-ups and smaller businesses -- it's an undeniable fact that most avenues of financing lead to dead ends ... at least for now. Bankers don't want to back you until you've accumulated a record of success as well as some type of asset base that will serve as collateral. Private-equity investors will probably also pass on investing in your company unless it fits the venture community's shortlist of desirable industry niches -- which are basically those that are likeliest to lead to initial public offerings or sales to large strategic buyers.
So it's been true for some time now that capital-hungry entrepreneurs have been forced to seek business financing in unconventional venues. What's new today is the variety of options, and among the most promising is an initiative launched recently by American Express. Known as Open: The Small Business Network, it gives new meaning to the notion of comprehensive service -- providing a fairly long list of benefits, mostly available through the Internet, that are especially valuable for owners in the early stages of growth.
American Express already has 2.5 million business owners as customers. Now it's got its sight set on increasing that market share to 3.5 million entrepreneurs, through features such as Open's new Express Approval, which immediately accepts or declines online applications for all of the company's charge- or credit-card products. (Thanks to some flexible payment options, business owners can extend payments on the balances of some charge cards for up to three months, which increases the cards' usefulness as a financing tool.) Better still, though it usually takes an additional day, is Open's access to working capital loans (from $10,000 to $50,000) and lines of credit (up to $100,000) from American Express. And, perhaps best of all for time-strapped owners, Open will even flag credit and financing opportunities within its network, based upon a customer's account profile, through its free financial dashboard. That's practically as good (minus a few lunch dates) as having a relationship with the neighborhood banker down the block.
The financing features tied to this new program are probably good enough -- just by themselves -- to lure many young companies to American Express's network. But Open has other financial features that also make great sense for entrepreneurs, including online credit tools and E-mail alerts that are provided by Dun & Bradstreet at heavily discounted rates and that help owners stay on top of the financial well-being (or lack thereof) of key customers and suppliers. Other discounts are available from American Express's "leading partners," including Dell, FedEx, Hertz, Mobil, and the Hilton family of hotels.
Eventually, the folks at American Express hope that Open will function as the on-line community for small-business owners -- a place (open.americanexpress.com) where entrepreneurs can go to swap strategies and war stories, while also tapping into a range of Internet advisory services. That may or may not happen. But in the meantime, it's a great place to go for financing assistance.
Note: American Express is a premier sponsor of Inc.com. This article was neither influenced by nor created for that advertising relationship.