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Lending through a new technology

How small businesses are finding financing online

Small businesses near and far are thankful that technology is on their side, especially when it comes to financing. Tremendous strides have been made in the banking world in the last few years that makes getting a loan easier than before, but many small businesses are finding that there is none easier than online.

Online financing?

Touting themselves as something of a Match.com for lenders and borrowers, BoeFly (www.boefly.com) is an online loan exchange that efficiently connects small business owners with more than 2,000 business lenders.

“We connect borrowers and lenders by helping borrowers build a better loan package and helping lenders find those borrowers,” says David A. Nayor, co-president and chief operating officer for BoeFly. “Being former lenders ourselves, we noticed inefficiencies in the marketplace—mainly where borrowers were having trouble finding lenders.

“We took a step back and figured there’s got to be a better way,” Nayor continues. “Looking at other industries that use the Internet to connect parties more efficiently, such as eHarmony, Match.com, Cars.com, or eBay, we took that concept and applied it to small business lending with BoeFly.”

How it works

BoeFly is a loan-packaging service with software that helps the borrower gain a thorough understanding of what goes into a small business loan request and how to properly package it. Within that process, the borrower receives feedback from the exchange explaining where the strengths and weaknesses are in the deal and allows adjustments to be made as to what lenders want to see based on the marketplace of lender preferences.

“It’s not incredibly complicated, but it does take work to get a loan—no matter the size,” says Nayor. “There is a certain amount of work that lenders want to see in the loan request and we empower borrowers to be prepared before they connect with lenders. It also helps lenders find deals they wouldn’t have ever been privy to otherwise. Really, the success comes down to us matching borrowers with lenders, and ensuring it’s the right lender.”

Kevin Ellis, vice president of Small Business Lending at Atlantic Coast Bank, is one such lender that uses BoeFly to make connections. “With traditional methods, someone looking for lending would have to send their information, documents, and loan package to me. Then I would have to sort through it and ask for documents that may be missing,” says Ellis.

“With BoeFly, there is very little to sort through as everything is right in front of you to make an informed decision—the business plan, tax returns, estimates for build out costs and equipment costs, data on the franchise and the industry, resumes… the whole spectrum of things we would ask for, which sometimes when dealing with a busy borrower can take a long time to obtain,” says Ellis.

Making a deal

One such informed decision Ellis made after a BoeFly alert came across his desk was with Nick Borst, a Jet’s Pizza franchisee in Destin. Borst, who was looking to get funding to open this franchise, says he saved the online financing option for last not thinking he would find anyone, “but within 24 hours we had Atlantic Coast Bank interested.”

“It is probably the best example of the strength of BoeFly’s platform in matching me with the borrower,” says Ellis. “He’s in Destin and I’m in Jacksonville, and we were still able to make this deal happen in a matter of hours.”

“This project would have been up and running three months earlier if we would’ve started with BoeFly,” says Borst. “We tried several traditional avenues, and while they thought we would be great people to run it, they didn’t have the ability to fund us and we lost a lot of time with their processes. With BoeFly, you know the interest you receive from a lender is from somebody with a serious interest.”

“There is a lot of information you have to put in to the system, but the more you put in the better your chances are and the nice thing is you only have to put it in once,” continues Borst. “In our case, we had a very in-depth, several hundred page—probably too much—business plan and BoeFly helped us determine what was pertinent information and actually needed for the loan. They outlined what they and lenders look for which allowed us put the right information in the right spots.”

Ease of use

“The word that always comes back to us is that it is efficient,” says Nayor. “Efficient from a time perspective as the borrower only has to build a loan package once and efficient from a cost perspective as borrowers and lenders only pay a very small posting or subscription fee to use the platform.  There are no large commissions involved as BoeFly did not want to drive up the cost of the transaction or this interest rate that the borrower ultimately pays. This allows lenders to get more aggressive on their pricing and terms and it allows borrowers to find the best deal for them.”

Ellis adds, “It’s a different financial world these days. This is a great way that allows borrowers, lenders, franchisors—really everyone—to navigate this new environment and reach places and surrounding areas that wouldn’t have been available to them otherwise. It allows me to be mobile without being mobile.”


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