Since the financial downturn, small businesses have faced some of their hardest struggles in accessing capital and loans from mainstream banks. The rise of alternative lenders has helped to mitigate that financial burden for SMEs, but one company is taking a new approach to the alternative lending strategy.
Jade Funding launched just this year to offer small- and medium-sized enterprises an alternative to big bank or Small Business Administration federal loans. The company said that it recognizes some of the unique hardships of SMEs, one of the largest being a lack of credit history.
According to reports, Jade examines financial health and potential of small businesses, not credit scores, when determining whether to approve a loan.
The service offers a streamlined online, one-page application process for free, and companies receive a decision either by email or over the phone in just a matter of days. Jade says 80 percent of applicants are approved.
“Getting a small business loan has always been tough, but post-Great Recession it’s possibly even tougher, Jade Funding Founder Jeremy Duboys said. “Lengthy applications, credit checks, low approval rates and cumbersome repayment terms all combine to make an unfriendly experience.”
In addition to a fast application and alternative approval process, Jade has also altered the repayment process to cater to SMEs. There are no fixed monthly payments, and instead Jade bases its repayment scheme on business sales. Companies additionally face no barriers to how they use the funds received, the company said.
Alternative lending has not only emerged as a beneficial service to SMEs, but venture capitalists are finding the space to be quite lucrative. Recent reports said investors focusing on alternative financing startups could push the industry to be worth $1 trillion.
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