How these 2 quirky online lenders could help you get financing #FinanceYourBusiness

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If you’re researching online lending, take a look at two of the more unusual (but legit) online lenders, peer-to-peer site Lendio and online pawnshop Pawngo.

Related: 6 tips for navigating online loan options

Matching small businesses with creditors: Lendio

When the economy collapsed in 2008, enrollment at Olya Losina’s fledgling art school began to decline. Marketing the San Diego-based Losina Art Center to a new generation of students required money that the painter and her husband/business partner, Bill Beatty, did not have. So in late 2011, they created a profile on Lendio, a free online service that connects small businesses with lenders. Within minutes, they had a personalized list of half a dozen potential lenders offering the five-figure, short-term financing they were looking for, and within days they received the money they needed.

Lendio CEO and co-founder Brock Blake said 300 U.S. lending institutions and nearly 1,300 individual lenders participate in the automated web-based platform, with banks and credit unions offering traditional long-term loans to fast alternative financiers such as peer-to-peer lenders and merchant cash advance providers. Each month, about 10,000 business owners come to the site seeking funding, with 60-70% being approved for a loan, Blake says.

In a conversation with ContractorLosina explained how Lendio and his specific lender, OnDeck, helped keep his art school afloat:

Contractor: Why did you go online for your cash injection?

Losina: When the economy took a hit, our students fell back. They just couldn’t spend the money, and that left us in trouble. We couldn’t go far enough to do marketing to grow. We needed to take out a small loan to expand the business. The banks wouldn’t talk to us; we had destroyed our personal credit by opening the business. We rent our accommodation, so we have no equity. What interested us about Lendio was that they didn’t look at fairness; they looked at the cash flow. And we could show it.

What was it like working with Lendio?

It was a simple process. We filled out a quick questionnaire and Lendio connected us with qualified lenders without us having to research and qualify them ourselves. It certainly saved us time. We scheduled a follow-up conversation with our Lendio representative, who gave us tips on how to assess lenders. Then we talked to a few of them. And we took the time to make sure OnDeck was legit.

What did OnDeck ask you?

They weren’t looking at our personal credit score; they were looking at our cash flow and if we would be able to repay the loan. The time from when we submitted our loan documents to OnDeck to when the money appeared in our account was three to four days.

What were your loan repayment terms?

We qualified for $15,000, but only took $10,000. It was an 86 day loan, repaid daily. The amount we were reimbursing was only $127 per day. We were getting a few new students a week, so it was a number we could manage. But finding an extra $3,000 a month all in one piece – it would have been crippling to see such a number. The loan ended up costing 10% to repay during those months. It was not a difficult decision to make. We used that $10,000 to make more money.

Related: Beat the Odds and Avoid Failure When Crowdfunding

How did you spend the money?

We used the money for brochures, a major upgrade to our website and creating videos for the site. In the spring of 2012, we launched a program to help students create and build a winning portfolio to enter art school. One of our students who entered a very competitive college. He came to us without any drawing skills. We saw that there was a real market for the wallet program, so we continue to promote it as a standalone product. The money we got helped us create this program; now it’s 10 percent of our business.

Being on the star pawn online: Pawngo

From the History Channel show, Star pawns, began to capture the attention of viewers in 2009, the seedy image of pawnshops got a well-deserved polish. Industry veteran Todd Hills hopes Pawngo, his online pawnshop, will help him achieve the same kind of success.

Much like a traditional licensed pawnbroker, Pawngo guarantees loans against valuables or purchases them outright. Once users enter a description for their item, Pawngo’s team of experts makes an offer based on the estimated resale value. If the user accepts the offer, they provide proof of identity and ship the item to company headquarters in Denver; once received, the money is transferred to the user’s account.

Hills had been in the pawnbroking industry for over 25 years, building and selling several stores himself. He realized that as credit markets dried up during the economic downturn, individuals and businesses needed new avenues to access cash.

“We were starting to see people who had never been to a pawn shop before, especially small business owners who needed loans up to $50,000, and they couldn’t get [the money] of their banks were therefore turning to pawnbrokers to cover their cash shortages,” says Hills.

He decided that bringing the concept online would allow him to reach a much wider audience, without the headaches and geographic constraints of building, staffing and growing a pawn shop. . He founded his web company in 2007 and launched the original site, InternetPawn, in 2009. That “too literal” name was tossed in favor of Pawngo, which launched in June 2011.

In 2010, Hill’s venture — which had previously raised $800,000 in funding from Access Venture Partners and Daylight Partners — caught the eye of Lightbank, the $200 million Chicago-based investment fund whose the partners had already founded four successful Internet companies, including Groupon. The Lightbank team has released $1.5 million in Series B funding.

Related: 9 Steps to Launching a Successful Crowdfunding Campaign

The company charges 3-6% interest, depending on the item and the size of the loan. In 2013, Pawngo launched a small business loan program that can make up to $1 million available in 24 hours without a credit check, depending on the resale value of the merchandise. The company does not require any principal payment until the end of the loan period.

The company originally focused on watches, high-end cameras and gold, but its list of categories has expanded to other precious metals, jewelry, loose diamonds, Apple computers and instruments. of music. As it builds its retail business, Pawngo will also earn the difference between the acquisition and resale prices of the items it sells.

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