Skip to main content
  1. News
  2. Business & Finance
  3. Industry

Funding small business loans where banks refuse to tread

See also

Restaurant owners in Los Angeles are among the small business owners needing a loan to meet a critical need only to have a bank turn them down.

The owner of Peruvian restaurant Los Balcones, Jorge Rodriguez, needed money to roll out the lunch menu at his Hollywood location. His request was denied, just like 82 percent of business owners who seek traditional loans.

The number comes from alterative funding source OnDeck, a technology platform connecting small business owners with access to capital. The company that connected Jorge Rodriguez with investors started in 2007 and spent a half-million dollars to comply with regulatory issues. CEO Noah Breslow said banks can make million dollar loans but their overhead is too great to profit from a $40,000 loan and the institutions don't leverage technology to service smaller loans.

Shortly after OnDeck launched, the 2008 recession hit and business owners were borrowing in a defensive posture. Noah told me one of the issues in the first years was how to lower default rates.

The company rolled out its OnDeck score to gauge the credit worthiness of potential borrowers by detailing how they run their business instead of examining their personal credit. He said loans are practically made in real time and funding can take place in hours. An example he cited is a restaurant getting a large catering job on a Wednesday and has to borrow money to hire temporary staff and buy food and supplies for a Saturday event.

Noah says the default rate is in the single digits and 80 percent of borrowers need the money to expand their businesses.

OnDeck has now loaned over $ 80 million dollars to hair salons, doctors' offices, and other small businesses in Los Angeles and has reached the $1 billion mark nationally.

For a complete interview and story on how a hair salon used OnDeck, click here for A Closer Look.

Further reading is available through OnDeck's website.

Advertisement

News

  • Sterling loses Clippers
    Donald Sterling loses big in court with no option for an appeal
    Video
    Video
  • Russia violating arms treaty?
    Russia is testing a long-range missile which violates an INF arms treaty
    World News
  • Ebola outbreak
    The Ebola epidemic in West Africa has proven to be quite difficult to contain
    Health News
  • Virginia same-sex marriage
    The ban on same-sex marriage is ruled unconstitutional in Virginia
    US News
  • Abigail Hernandez suspect
    A suspect is in police custody for the disappearance of Abigail Hernandez
    Crime
  • Bachelorette finale
    'The Bachelorette' is in the books, which lucky guy got Andi's final rose?
    TV