Signing up for a loan as a small business is a scary prospect. On top of planning on how the loan is paid back and what is at stake for the entrepreneur, most are completely lost on knowing what is actually a competitive rate and who is the best lender for the business. Many entrepreneurs aren't aware that business loans are not all created equal. Factors like the business sector, use of funds and payback schedules can drastically change the rates.

The new startup SMBRate.com is taking an interesting approach to helping both lenders and entrepreneurs find the best match for a loan by aggregating open banking API, and pre-qualification APIs for alternative lenders. In other words, publicly available data that is relevant to a specific small business is automatically processed by SMBRate to present the best options to both lenders and small businesses.

SMBRate wants to educate small business owners, as founder Eric Griego explains, "We want to build an index and a central source of calibration so people can understand what rate they should expect."

SMBRate's Special Sauce

This startup's special sauce is in being able to use data science to effectively learn more about a specific small business, and understanding things like revenue, size, age, etc.

By doing all of this legwork upfront, SMBRate plans on getting a loan options much faster, and presenting business owners with more offers.

Here's How it Works

A small business owner signs up at SMBRrate.com and submit banking credentials to confirm that they are legit, they are not fraud flagged, and they are an established business. Then SMBRate reaches out to lenders with the public information available on that business, and the banking confirmation of verification, and as a result the business owner receives roughly 10-20 offers to compare.

The platform is free, even if you aren't looking for capital at the moment and just want options for the future. Just sign up and SMBRate will aggregate and send snippets of relevant business sector information to help entrepreneurs get positioned for great financing options. 

Simplifying a Complex Business Loan Ecosystem for Entrepreneurs

The biggest lending criteria that most entrepreneurs don't know about is use of funds for lenders. They have equipment loans, working capital loans, line of credits, and term loans. All could be used for something like buying inventory or equipment, but all have very different costs and financial ramifications.

Some loans are priced by cents on dollar, simple interest, APR - and it is all quite a mess nowadays that has been a challenge for entrepreneurs to compare each option. SMBRate is looking to streamline all of this complexity with a comparison tool that aggregates data to find the best options.

Griego explains, "You sign up, we verify you, we lay out which offers are the cheapest, fastest, and most beneficial. And if our owners are interested they just have to click one button and those financing options can become real."

Bottom Line for Entrepreneurs

Business owners want to keep a close eye on their business and not get mired down in mundane details of things like lending that, while they are crucial to running a business, aren't part of the day-to-day grind of pleasing customers.

Keep an eye out for more startups like SMBRate to come along in many sectors even outside lending that will use aggregate data to help entrepreneurs get the best options, make decisions faster, and be more effective at running their business.

 

Published on: Nov 10, 2016