Small business with a big picture
By Kate Lysakowski
There is no shortage of visible entrepreneurship at work in Canada. In fact, small businesses across the country account for approximately 50 percent of its employment. The sizable number of jobs that Canadian small businesses create is a lucrative component towards driving the country’s economy, yet as Troy Wright, Founder and CEO of Lendified, explains, as many as 20 percent of those ventures are declined for a small business loan. Having worked closely in several facets of the financial services industry for more than 25 years, Wright saw the opportunity to begin Lendified after evaluating “the needs that customers had across Canada and in other countries around the world, where major players, mostly the banks, were falling short.”
The entirely online platform Lendified launched in February 2015 supplies small business loans with an approval rate of 80 to 90 percent. As Wright suggests, “(Lendified) was born out of the opportunity to meet the needs of small businesses in Canada beyond what existing banks and other financial institutions currently do.” The differences between Lendified and the major players are significant. The loan experience with big banks can be lengthy, challenging and stressful; anyone who has done it would know the application process could take up to as long as eight weeks, that the some 15 different documents required to complete the application can be difficult to obtain, and that the estimated 25 hours of time required to complete the loan process does not necessarily merit a positive outcome.
Alternatively, the Lendified business loan application process prides itself in being fast, easy and efficient, whereby the fully online application takes only five minutes to complete and warrants a response within seven. If the applicant is approved, they will get a loan offer immediately, with funding available as soon as the next day. All that paperwork required by the banks in order to fulfill the loan application: articles of incorporation, tax and GST numbers, business plans, recent financial statements, suppliers, contracts, historical financial fluctuations, and more, is automated at Lendified so that their data sources can actually pull up all of the necessary information, saving the applicant time and energy better spent running their business. As Wright explains, “We turn something that’s very painful and very difficult into something which is extremely easy … people are busy running their business; we let them get back to what’s important.”
So what’s the catch, one might ask? How is it that Lendified is able to offer such a simplified version of the small business loan application process compared to that of their big institution counterparts? Lendified takes up to four times more risk than the banks, thus their interest rates are reflectively higher, typically 14.99 percent. “A lot of small businesses,” says Wright, “use personal credit cards to fund their business, so we try to compete with those rates.” Lendified is also competitive in that because it operates as a strictly online platform, and the time constraints associated with banking hours disappear. What they have noticed, explains Wright, is the interesting timing of when the applications are submitted. “Many of them come through outside of the 9-5 window – people are busy running their business!”
Nearly one third of Lendified’s demographic is made up of the millennial age group, accounting for almost 40 percent of all small business loan applications, proving that the 25- to 35-year-old age bracket is comfortable with a business that operates entirely online. Undoubtedly, the trend bespeaks the future of online banking. As Wright suggests, “it’s not a revolution, it’s evolution: the existing incumbents, particularly the banks, know that they have to be faster and better.” Lendified has the ability to redraw the entire loan experience, whereas the major players have to maneuver around existing infrastructure and inflexible legacy systems. “(Lendified) is moving from where the banks are to where they would like to be and where they know they need to be, but cannot get there right away.”
In the short time that Lendified has been in operation, their solid management team, with a combined experience of over 120 years, as well as their strong internal governance, has gained the trust of small business owners in every province throughout Canada, providing small, short-term loans to all types of industry: “You name it … we’ve got just about one of everything! We are a national platform that can service any type of company.” While Lendified shares its passion for supporting what they believe is the “economic engine of the country,” Wright is quick to defend the role of the banks, explaining that day-to-day chequing accounts and lines of credit are still very important, and that Lendified is in no way trying to replace that function. However, Wright did offer a few parting words to illustrate the big picture of Lendified’s goals: “We are using technology and data analytics to completely revolutionize the way loans are made in Canada and globally.”
To learn more about Lendified, visit www.lendified.com.