The industry of lending money to businesses is booming. We see it every week on Shark Tank - investors investing in businesses or sometimes just offering them a loan (which must be paid back) so the businesses can scale and get to the next level. Loans are often needed to purchase more inventory, to expand the business or other growth-oriented reasons.
Intuit, this week, launched a new offering, Quickbooks Capital a service lending money directly to small businesses.
According to its press release, the QuickBooks Capital credit model is delivering powerful results for small businesses --getting capital into the hands of so many credit-worthy small businesses that otherwise felt stuck,” said Rania Succar, head of QuickBooks Capital at Intuit. “We are particularly proud to be innovating for young businesses because they are critical to the future success of the economy, but very underserved by the options available in today’s credit market.
Quickbooks "sees" all the real time data of millions of its business owner customers, it knows better than just about any other company how a business is or is not doing. Quickbooks sees the invoices you're sending out, the money that's come in and etc.
With this information, Quickbooks is able to get a holistic view of the financial health of a company and therefore able to make a successful loan, for growth, to that particular business.
The traditional process of applying for credit today is full of friction. It sometimes requires multiple years of tax returns, business plans and other documents and often takes several days or weeks to hear back with a final decision. I remember when I applied for just a line of credit to launch Smart Hustle Magazine.
In the case of some online lenders, it can result in very high interest rates with low transparency. QuickBooks Capital removes all of the friction from the application process. Small businesses that qualify for the offering can access funds from a new “Capital” tab right inside QuickBooks, where they can always see how much they are eligible to apply for based on the latest developments in their business.
The working capital loans currently offered range up to $35,000, with a term between three and six months. The product also emphasizes transparency by always displaying annual percentage rates (APRs) to borrowers. Other than interest cost, there are no origination fees or prepayment penalties.
The market for small business lending includes Ondesk, Fundbox, Kabbage, BlueVine, American Express and many others.
Intuit is hoping that the years of trust it's earned in the small business market, and it's easy to use interface and overall application process make it the lender of choice for growing businesses.