A familiar name to small business owners in Southern Nevada has gotten into the online lending business.
The Small Business Administration says its new online marketplace matches potential loan candidates with lenders on all 50 states.
The service is called Leveraging Information and Networks to Access Capital, or LINC.
With LINC, the SBA is joining online lenders On Deck Capital and Biz2Credit, which provide financing to small business owners through digital marketplaces that match lenders and borrowers.
“There’s a hunger among entrepreneurs to financing to get their business off the ground or take the next big step in their expansion plans,” Maria Contreras-Sweet said in a statement. “If you have a bankable business idea backed by good credit and sound financial planning, the SBA wants to streamline the process for you to get the capital you need.”
Contreras-Sweet said the SBA has cut the lengthy, paper application process for its loans to a list of 20 questions.
Once answered and submitted online, prospective lenders can connect with them within 48 hours. However, there is no guarantee of a loan, the SBA said.
LINC will roll out in waves. The first part will be connecting small business owners with nonprofit lenders that offer free financial advice and specialize in micro-lending.
Also included are loans in the SBA’s Community Advantage program and real estate financing, or 504 loans. These lenders have made a combined 42,000 loans totaling more than $17 billion since 2009.
The SBA’s Community Advantage program offers loans of up to $250,000 to businesses in underserved communities. In Nevada, those lenders are CDC Small Business Finance Corp., Idaho-Nevada CDFI, and Nevada Microenterprise Initiative.
David Leonard, the SBA’s branch manager in Reno, said in the longer-term the agency will look to add more traditional banks that offer an even wider array of financial products.
Among the list are U.S. Bank, Wells Fargo, Meadows Banks, and several others in Nevada.
“We don’t have a date for the second part of the roll out,” Leonard said. “But almost every bank and some credit unions in Nevada work with the SBA on 7 (a) loans if not 504 loans.”
The SBA’s 7 (a) loans are used to establish a new businesses or to assist in the acquisition, operation or expansion of existing businesses. The 504 loan program provides financing for major fixed assets such as equipment or real estate.
Leonard said with the LINC program, if a client isn’t ready to borrow, because of their credit or other problems, “we provide resources to get them ready to apply for the capital.”
He said they’ll be refereed to SCORE (Service Corps of Retired Employees) and other nonprofit associations that offer free counseling, advice and information on lending and starting a business.
The SBA is now in the same loan marketplace as online lenders Biz2Credit and On Deck, which can approve loans in minutes and also deposit the cash in accounts within minutes.
Rohit Arora, CEO and founder of Biz2Credit, called LINC a “good concept,” but said the biggest challenge for the SBA is that while you fill out the questionnaire online, everything else is offline.
“The look and feel is very primitive,” Arora told the Las Vegas Business Press. “There is a very basic form online. The key thing is to create an online experience for a customer.”
Arora said with Biz2Credit everything is online from digital contracts, approvals, and repayment schedules.
“My take is, it’s a good start but it’s not going to make much difference,” he said. “The SBA should not be doing it on their own; they are a facilitator.”
On Deck says it issued 168 loans totaling $9.12 million last year in Las Vegas. Since its founding in 2007, the online lender has made 375 loans totaling $17.2 million in Las Vegas.
“At On Deck, we’re 100 percent focused on small business and increasing Main Street’s access to capital,” the company said in a statement. “The SBA’s recent efforts to incorporate technology and harness the power of the Internet are further validation that this is the way forward in serving America’s small businesses.”
Arora didn’t release Biz2Credit loan numbers for Las Vegas. He said business has been good, and they’ve seen “decent growth in Nevada.”
Arora added that the “overall economic landscape in Nevada has improved” over the last year.
The SBA provides billions of dollars in loans every years through its 7 (a) and 504 programs.
Last year, the SBA guaranteed $19.2 billion in loans, including $169.2 million in Nevada.