Short Term Small Business Lending

The Short Term Small Business Lending panel at LendIt USA 2015 with Steve Alloca, of PayPal; Anton Hanebrink, of Square Capital; Kathryn Petralia, of Kabbage; Jason Rockman, of CAN Capital; Stephen Sheinbaum, of Merchant Cash and Capital; and moderator Brock Black, of Lendio.

These online lending companies combine innovation with discipline to assure their continued success so that they are undeterred by the inevitable prospect of regulation.

Key drivers of dynamic SME growth, Paypal and Square, share the same approach to their lending behaviors, relying solely on their own data to rapidly assess creditworthiness.

Relative old-timers (in the marketplace since 1998, a millennium ago), CAN Capital has a sufficiently robust framework of checks, to have achieved an investment-grade credit rating, according to their LendIt representative. CAN described the continual raising of the bar as more mature players in finance enter the marketplace, suggesting “an omni-channel approach to surrounding small businesses with smart messaging”.

Kabbage founder Kathryn Petralia is well prepared for more institutional scrutiny, as they are already subject to regulations via one of their banking partners and are investigating additional sources of capital.

Steve Alloca of Paypal said that their data sources had not yet been tested by this credit cycle and they would not seek growth for growth’s sake, but focus on access to capital and combatting fraud. Square executive Anton Hanebrink cited the critical need for transparency and to be able to adjust quickly, something which enabled them to advance $100M in their first year of operation.

Technology will continue to drive the sector, in the view of Merchant Cash & Capital founder Stephen Sheinbaum, and institutional monitoring can only enhance validation, so that it will be difficult for the traditional lenders to recapture the market from the digital lending pioneers.