The online banking platform Azlo and the small business lending platform Kabbage recently launched Mission Street Capital, a new program designed to provide SMBs banking with Azlo with access to loans through Kabbage for up to $250,000.
"In partnership with Kabbage, Mission Street Capital will provide Azlo customers, including businesses with thin credit files, gig economy business owners and fast-growing small businesses, a fully digital solution that enables access to working capital whenever and wherever it is needed," the companies said in a statement.
Because the offering leverages a fully-automated funding decision process based on customers' real-time banking data and other business performance data, speed of response is a key benefit, allowing Azlo customers to apply for and access funding within minutes.
"Azlo is helping fill a crucial gap in our financial system to serve underbanked small businesses," Kabbage chief revenue officer Laura Goldberg said in a statement. "Kabbage's real-time lending platform allows Mission Street Capital to effectively serve any small business in any location to access the funding they need to grow."
Separately, PayPal today announced that it has provided more than $10 billion in funding through over 650,000 loans to more than 225,000 small businesses since it started its small business financing program in 2013. One key benefit of that service is the speed of the decision-making process.
"Typically, small businesses only need a few thousand dollars to manage immediate concerns, and most often, they need it immediately," PayPal vice president Darrell Esch wrote in a blog post.
SMB Funding Trends
The 12 U.S. Federal Reserve banks recently published the results of the 2019 Small Business Credit Survey (SBCS), which found that 43 percent of respondents sought external funds for their businesses last year, and 54 percent of those that applied for $250,000 or less did not receive the full amount they sought.
"Among all small businesses – applicants and non-applicants – the SBCS finds that nearly half (48 percent) indicated their funding needs are satisfied, 23 percent have shortfalls, and another 29 percent, including debt-averse and discouraged firms, may have unmet funding needs," the report states.
Online lenders approved 82 percent of funding requests last year, and small banks did so for 71 percent of requests. Notably, those who borrowed from small banks reported the highest levels of satisfaction (79 percent), followed by large banks (67 percent), with online lenders in last place (49 percent).
Among those that borrowed from online lenders, the speed of the funding decision was the most significant factor in their choice to do so, while an existing relationship with the lender was the primary motivator for those that borrowed from large and small banks.
Separately, the Biz2Credit Small Business Lending Index, based on a study of over 1,000 small business credit applications, recently found that approval for small business loans at big banks reached a record high of 27.5 percent in April, while approval at small banks hit 49.8 percent. Loan approval rates at alternative lenders dropped slightly to 57.2 percent in April.
"Small business lending is as strong as it has ever been in the 21st century's post-recession era," Biz2Credit CEO Rohit Arora said in a statement.