GreatBiz Funding began out of the desire of C.E.O. Mickey O’Brien to help get better financing for businesses. After years in his own businesses of switching between high interest loans and struggling with banks to give enough credit, he switched gears to focus on small business lending. Mickey had taught commercial lending up until 2010 when the market went into a downward spiral. He says the secondary market went dry on small business loans and most banks had lost interest in this market because of the cost of originating and handling these small loans.
As of recent SBA has stepped up its investment into small business again and GreatBiz along with its partners built a bank-centric marketplace—an “ecosystem” in which GreatBiz refers qualified SBA loan applications to a network of partner banks.
In brief, GreatBiz Funding makes it simple for small businesses to apply for an SBA loan online or by mobile device. The company runs the applications through an artificial intelligence filter, and, for those that pass, offers them to its partner banks.
SBA 7(a) loans of less than $350,000 comprise most of loans arranged by GreatBiz, although it has a program for larger loans, as well.
C.E.O of GreatBiz, Mickey O’Brien has broken down the different criteria that banks say “yes” to and his team will help guide you through getting approved with one of our partner banks. Not all banks are the same, they have different credit policies that layer on top of the SBA criteria.
There are expensive online players that offer fast capital but at a high rate and cost. But borrowing money at an expensive rate can just eat up most of your profit and put you back where you were before getting the loan. Working with our team will help you sort through the different loans and help you find one that suits your business best.
Business owners can get 5 to 10 phone calls a week as well as letters daily offering high rate working capital with daily payback. Mickey created GreatBiz to cut through all the crap and get to the truth that it is possible to get a low rate with a longer term loan.
We’ve partnered with tech companies that can process loans in minutes automatically comparing guidelines to see which loan you fit into. And with the help of our technology partners we are able to tap into banks with their low cost of capital to provide well-priced loans to small business. The partner software enables banks to auto-underwrite SBA loans quickly and easily with multiple banks looking at the loans.
We are currently focused on 7(a) loans in the sub $350,000 market for working capital. And do commercial real estate loans up to $5 million on the platform—also 7(a) loans.
Our bank partners constantly tweak their underwriting, either to say “yes” more often to certain credits, or to dial back a particular industry code. We work closely with the business owner and our lending partners to make the deal happen, this does not happen at your standard bank. Even though the process is automated, there is a balance between software and human beings. One of our team will be available every step of the way.
The banks are going to have a credit presented to them online to look at, but there’s a human being that’s going to say “Yes” or “No” at the end of the day.
We’re able to do a very good job at understanding what credits will fit their “credit box,” and then making sure they’re seeing those credits. You success is our target!
All of our loans under $350,000 have a ten-year term. Most of the other players in the market—OnDeck or Funding Circle, for instance—are going to have somewhere between a one- and five-year term—most typically it’s two or three years, and at much higher cost. Our average APR is between 7% and 8%—prime plus 275 [basis points], compared with other online marketplace lenders where the average APR is as much as 44%.
So, if somebody needs $100,000, they’ll get $25,000 with a lot of the alternative lenders online. One of the reasons for that pattern is that to service that debt, the monthly payment is going to be so high that the small business wouldn’t be able to afford the monthly payment on a $100,000 loan, but it could afford the monthly payment on a $25,000 loan.
For us a $100,000 loan has about a $1,100 a month monthly payment. With one of the other alternative guys in the market it’s going to be somewhere between—if they’re lucky—$2,000 to $3,000 a month. And if they’re unlucky, between $12,000 to $13,000 dollars a month with daily or weekly payments. That’s an order of magnitude difference.
When it comes to our business clients we want a relationship, same goes with our partners. We don’t want to work with hundreds of banks. We’re picky and choosy about which bank or partner we’re going to add to our lending platform.
Yes, there is a difference!
We’re not able to get to “yes” on every SBA loan, obviously. There is absolutely a market for other marketplace loans and alternative lenders that we work with to get you the funds you need. Banks have essentially left the smaller end of the market, we’re helping to bring them back. We are consistently focused on meeting customer needs and are offering other ways as well to help them grow their business through business classes and business coaching. Ultimately a healthy growing business is a fund-able business.