March 31, 2015 · Small Business Loans · (No comments)

Small-business lending marketplace Lendio has closed a $20.5 million funding round to grow its team and partnerships, the company announced on Tuesday (March 24).

The Series C round was led by Napier Park Financial Partners Group, with participation from Blumberg Capital, North Hill Ventures and Pivot Investment Partners, and existing investors Tribeca Venture Partners, Runa Capital and Highway 12 Ventures. The new money brings Lendio’s total funding to $33 million.

Lendio will use the funding to increase its online lending innovation, deepen relationships with the roughly 100 lenders on its marketplace, expand its partnership program and grow its team of loan advisors, the company said. Napier Park Managing Partner Dan Kittredge and Blumberg Capital Principal Chris Gottschalk will join Lendio’s board as part of the deal.

Lendio is part of the wave of tech-powered lending marketplaces that has only gained momentum since the December IPO that gave Lending Club a $9 billion valuation. Unlike Lending Club, which primarily handles consumer loans, Lendio’s aim is to be the Kayak for small-business loans, Lendio CEO Brock Blake told Bloomberg News.

Along with its network of lenders, Lendio has also struck deals with some retailers to refer potential borrowers to the marketplace, including the UPS Store and Staples, which announced a lending-based business initiative in late February.

Lendio has become the go-to hub for small-business owners to obtain the financing they need to grow and thrive, Blake said in a prepared statement. Our focus is to provide three essential benefits to the business owner — offer a wide variety of loan options, speed up the process and reduce the time and effort it requires to get funded and provide a white-glove trusted experience. Because we have served hundreds of thousands of business owners, we’ve been able to scale our business and improve the lending experience through an easy-to-use online matching platform, advanced machine learning and lender integrations.

Aside from the number of businesses that Lendio has arranged loans for through its marketplace, Blake wouldn’t say how much loan volume Lendio has arranged, what the company’s current valuation is or whether it is profitable.

March 31, 2015 · Small Business Loans · (No comments)

As small business owners, we all want our businesses to survive and thrive. Sometimes, that means making personal sacrifices. But a new study by Experian reveals that women business owners may be making too many sacrifices when it comes to their personal finances and it’s putting their personal credit ratings at risk.

The study of both male and female business owners examined both business and personal credit data, then analyzed the differences between the credit profiles of the men and women entrepreneurs. Here’s what they found:

  • Women business owners have lower incomes than male entrepreneurs. Just 17.4 percent have a personal income of $125,000 or more, compared to 21.2 percent of men.
  • Women business owners have an average business credit score of 34 (out of 100, with 100 being the least risk); men business owners average 35.
  • Women business owners’ consumer credit scores average 689; male business owners’ consumer credit scores average 699.

What’s behind the discrepancy? Women entrepreneurs in this study were most likely to own and operate businesses in these six industries:

  • Business Services
  • Beauty Shops
  • Retail Stores
  • Personal Services
  • Building Maintenance
  • Restaurants

Men were most likely to own and operate businesses in these six industries:

  • General Contracting
  • Business Services
  • Real Estate
  • Restaurants
  • Motion Picture Distribution
  • Retail Stores

Although there is a lot of overlap here, general contracting and real estate businesses may be more likely to generate larger sales than the typical businesses run by women. Women-owned businesses typically generate lower revenues: Only 14.5 percent have sales of more than $500,000, while 24 percent of men-owned businesses do.

In addition, women-owned businesses pay their bills 8.4 days past due, while male-owned businesses pay theirs an average of 8.1 days past due.

Women’s more limited access to commercial credit is reflected in the study. Just 18.5 percent of women-owned businesses have one or more open commercial trade accounts, while 22 percent of men-owned businesses do.

As a result, women are more likely to turn to their personal credit to finance business operation and growth. Over 25 percent of women entrepreneurs have 10 to 19 tradelines open on their personal credit files; just 17.5 percent of male business owners do.

Women are also more likely than men to have delinquent personal credit accounts. In the last 24 months, women entrepreneurs had an average of 1.3 personal credit accounts become 90 or more days past due, compared to an average of 0.9 for male entrepreneurs.

What gives? When women business owners can’t get access to capital and credit they need through commercial channels, they’re forced to turn to their personal credit to keep their businesses running. This can be risky, affecting your ability to pay off personal obligations and ultimately hurting your personal and business credit rating.

What can you do if you find yourself in this bind?

  • Do everything you can to cut costs so you don’t need as much capital.
  • Look into alternative sources of financing that rely less on your business credit rating. Invoice-based financing or equipment financing, for example, allow you to turn receivables or planned equipment purchases into “collateral” for loans that can help you grow.
  • Seek loans or investments from friends and family to avoid hurting your personal credit rating. Be sure to treat them as you would any type of loan or investment, including issuing stock and drawing up loan documents.
  • If you’re launching a new product or service, consider crowdfunding your growth via peer-to-peer sites such as Kickstarter.


Businesswoman Photo via Shutterstock

More in: Women Entrepreneurs

2 Comments

March 31, 2015 · Small Business Loans · (No comments)

Kabbage has taken root in the US and UK markets as a platform where small businesses can quickly apply for and receive working capital loans — with Kabbage making fast decisions about eligibility through a mix of smart algorithms and online and offline data sources. Now the startup is growing its business on two fronts. It’s kicking off a new white-label offering where third parties will power loan services using Kabbage’s technology. And through its first white-label partner, it is expanding to a third market, Australia, its first in Asia Pacific.

The service in Australia will be offered through a new service called Kikka Capital that will launch in May. Kabbage — named after a slang term for money — says Kikka will license its platform to onboard customers, as well as underwrite and monitor the loans. Kikka, meanwhile, will be responsible for marketing, funding, loan servicing and other operations. The loans will be up to $100,000 and be over a term of one to six months.

The expansion to Australia and more generally the Asia Pacific region was something that Kabbage hinted would be coming last year, when it raised a $50 million Series D round led by Japanese investor SoftBank Capital.

Overall, Kabbage has raised more than $460 million in a mix of debt and equity. A large portion of that going towards providing the capital upfront for SMBs to borrow on its platform. CEO Rob Frohwein tells me that to date, Kabbage has loaned out $700 million and is on track to loan out $1 billion to SMBs this year — in addition to its newer consumer business Karrot. Altogether, the company currently has over 40,000 active customers.

(The Karrot business, meanwhile, is growing, too: Frohwein says it is “on track to do $250 million in loans this year and aiming for $1 billion next year.”)

This is not the first time that Kabbage has worked in partnership to scale up its business. In the US, the company has also been partnering with banks to provide loan services; and earlier this month it announced a deal with MasterCard to power a small business loans service that MasterCard will be offering through its merchant acquiring banks.

CEO Rob Frohwein tells me that Kabbage will be making two similar announcements along the lines of the MasterCard deal in the next four weeks. “These deals have exclusivity and bring us into banks and closely related financial services companies such as merchant acquirers,” he said.

(This means that in theory, an SMB in the US can now get Kabbage loans directly through Kabbae’s own retail portal, a bank, or through their credit card services supplier — most commonly a bank again.)

What’s different about the Kikka service is that it will be the first time that Kabbage is rolling this out internationally, and also giving up its branding and involvement in the financing side of the business to another startup, acting only as the tech partner — not unlike what Paydiant, recently acquired by PayPal, provides in its mobile wallet services with CurrentC.

The white-label structure also means that Kabbage can expand more rapidly to other markets. Indeed, when Kabbage announced its $50 million Series D round and its plans for Asia nearly a year ago, Frohwein pointed out that the expansion would not be immediate:

“Obviously many international markets pose not only regulatory hurdles but also technology challenges,” he said at the time. “We tend to focus on markets where there’s a strong technology infrastructure for small businesses and where data is meaningfully available electronically.”

While this may mean that Kabbage’s own cut of the commission on these loans is smaller, it has lower costs in other areas. For example, by swapping to a white-label model, Kabbage is able to bypass some of the licensing and financing that it might have needed to undertake were it to launch a full offering, leaving these parts to local providers.

“Working with Kabbage gives us a tremendous opportunity to bring their breakthrough lending technology platform and seamless user experience to small businesses across Australia,” said David Brennan, Kikka Capital founder and managing director, in a statement. “Launching on the Kabbage platform allows us to dramatically accelerate our entry into small business lending and to manage risk effectively by underwriting businesses in real time, throughout the entire lifecycle of a business.”

That Kabbage platform’s unique selling points are based firmly around data. The company currently bases its eligibility for loans on an applicant’s track record and data across a lot of different services. Originally developed first for online businesses, it’s heavy on using data from sites like eBay, Amazon, and Etsy where these SMBs may already be doing business, plus several other sources such as accounting software from the likes of Xero and Intuit.

Ultimately, Kabbage claims that its mix of data sources and how it is able to parse the information gives it a more accurate reading of suitable loan candidates and helps make it more certain that what gets borrowed also gets repaid (a thorny issue that has foxed other online loan providers).

March 30, 2015 · Manage Debt · (No comments)

More often than not, debt and desperation go hand-in-hand. With the amount of strain debt can put on your wallet and your life, it’s no wonder why so many people find themselves searching for quick fixes. Unfortunately, there is no magic wand to make your debt disappear. If you think you’ve found a fast solution to the problem, you may find that you caused more damage than repair especially if your spending habits tend to get you deeper into debt. So, with that in mind, here are five debt repayment strategies that can backfire on you.

1. Dipping Into Your Retirement Funds

When you are deep in debt, falling back on the money in your 401(k) can be extremely tempting and it’s relatively easy to do. However, this decision comes with potential ramifications. For instance, if you’re not of retirement age, you might have to pay it back and it will come right out of your paycheck, leaving you with less take-home pay. Or, if you don’t have to pay it back, you could end up owing the IRS for income. What that means is that you would have to take out more to cover the taxes or figure out a way to deal with your new creditor the IRS or your state.

My suggestion is to only use your retirement savings as a last resort. Remind yourself that it took years to build those funds and to use it for unsecured debts is often a mistake. Look at the big picture and try to figure out the underlying issues. If it’s cash flow, then taking these funds will not help fix the problem. Your retirement savings is not an ATM machine, so don’t treat it like one.

2. Borrowing From Friends amp; Family

Feel those strings pulling on you? That’s the feeling of borrowing from friends or family to pay off debt. Listen, if you can borrow money from them without guilt and the giving party can be nonjudgmental, then give it a shot. More often than not though, borrowing from friends and family will only put stress on, or even destroy, your relationship. If you choose this option, no matter what side you’re on, I always recommend that everything be put in writing so everyone is on the same page.

Get a Free Credit.com AccountSign up for Credit.com and get your FREE Credit Score Personalized Action Plan to help improve it. Free updated every 30 days. Get Started Now
3. Refinancing or Taking a Reverse Mortgage

If youre not careful, borrowing against your home’s equity can be a dangerous move. While you might find yourself with a lower interest rate on your debt, you’re turning what was once an unsecured debt into a secured one. This means that if you were to ever find yourself injured or out of a job and unable to make your payments, you may be at risk of losing your home. When it comes down to it, taking out a home equity loan or doing a cash-out refinance only trades one debt for another.

Another way people are looking to pay down debt is to take a reverse mortgage. This is only available to people 62 years and older and has its own set of considerations. There are large fees for reverse mortgages and the process typically results in you passing ownership of your home over to the bank as opposed to your heirs. If you want to keep possession of a home and have more financial peace of mind, downsizing may be a better option for you.

4. Transferring Your Balance to a New Credit Card

Consolidating your debt onto one card to take advantage of a low introductory rate is a common get-out-of-debt strategy, but there are two things you need to keep in mind.

First, those introductory rates are temporary and will go up to a percentage that’s likely higher than you have on your old card. Unless you know you can pay your balance off in full before time runs out, you may want to rethink this tactic. Second, take balance transfer fees into consideration. A high balance transfer fee could wind up costing you just as much, if not more, than the interest you already owe. Consider whether you can take practical approaches to increase your cash flow to put toward your debt instead. This calculator can show you how long it will take to pay off your credit card debt.

5. Filing for Bankruptcy

Most people assume that bankruptcy is an easy way to make all of your debt disappear. However, bankruptcy is a serious decision that will stay on your credit report for up to 10 years and will seriously limit your access to credit in the near future.

Debt isn’t something that can be fixed quickly, but realize that’s a good thing. Getting into debt is an opportunity for you to seriously reconsider how you manage your money and adopt better financial skills. Paying off loans takes time, patience and dedication and the habits you pick up while paying off your debt can help you to avoid it in the future.

If you want to see how your debts are affecting your credit, you can check your annual free credit reports through AnnualCreditReport.com. You can also get a free credit report summary updated every month on Credit.com.

More on Managing Debt:

  • How to Pay Off Credit Card Debt
  • 5 Tips for Consolidating Credit Card Debt
  • The Best Way to Loan Money to Friends amp; Family

Image: iStock

Sign up for our weekly newsletter.

Get the latest tips advice from our team of 30+ credit money experts, delivered to you via email each week. Sign up now.

March 30, 2015 · Fundings · (No comments)

FEARS over the future of crimefighting in Coventry follow the announcement that 2,500 more police jobs face the axe under £130million additional budget cuts.

West Midlands Police is also to explore working in partnership with private firms as it shrinks to the smallest size in its 41-year history.

Unveiling its blueprint for a new era follows more unprecendented government cuts in the forces funding.

The predicted job losses among officers and civilian staff by 2020 is similar to the number of posts lost since the coalition government came to power in 2010 pledging to elimate the national deficit.

More government fundings cuts to police forces nationwide are expected whoever forms the government after Mays election as the national deficit has only been halved.

Coventry Labour MPs including Geoffrey Robinson and Jim Cunningham are backing a West Midlands-wide campaign for fairer funding – claiming better-off areas in southern England have been spared such drastic cuts.

Mr Robinson is among those who fear harm to frontline policing from funding cuts and the forces capacity to fight crime.

The force says it has developed its blueprint after consultation with staff which attracted 5,000 responses.

A force statement said £130million savings over the four next years came on top of savings of £125million already made since 2010.

It says the blueprint reflects the growing use of technology and digital engagement used by the public in reporting incidents, alongside more focus on preventing crime including by expanding the forces approach to prolific offenders working with other agencies.

Neighbourhood policing will be more concentrated in areas of the most need.

But the force insists it will look to develop a neighbourhood policing model not constrained by geographical boundaries acorss the seven council areas including Coventry.

Chief Constable Chris Sims said the force needed to respond to change by becoming a smaller, faster, smarter service that is responsive to the needs of local communities.

He added: “Neighbourhood policing is key to our relationships with communities.

Police and Crime Commissioner David Jamieson said: “We are doing all we can to ensure we can deliver what the public needs and desires.

“Over the next five years we will be working hard to introduce new technology that will enable officers to work more effectively in serving the public.

Share This

March 30, 2015 · Small Business Loans · (No comments)

RALEIGH, NC American financial institutions are lending more of their loan portfolios to small businesses, whether franchised or not. According to data from Sageworks Bank Information, outstanding small business loans totaled $12 billion more in 2014 than the previous year, marking the first annual increase since 2010. 2014s small business loans increased 2 percent compared to the 0.5% drop in 2013 and the 4.3% drop in 2012, according to Sageworks.

March 30, 2015 · Small Business Loans · Comments Off

It only took Sen. Ted Cruz, the first major politician to officially declare he is running for president in 2016, a few minutes to mention the words small business during the speech announcing his candidacy.

The first reference came when discussing how his wife, Heidi, started a bakery in grade school. The second came during a litany of thoughts on what Cruz believes is wrong with America.

Imagine instead of economic stagnation, booming economic growth, Cruz intoned. Instead of small businesses going out of business in record numbers, imagine small businesses growing and prospering.

The fact that Cruz felt it necessary to mention small businesses early on in his speech shouldnt come as a surprise. For the last three decades, politicians have extolled the virtues of small business as the cornerstone of the US economy. In May of 1983, Ronald Reagan gave a radio address about how small businesses owners have led this country since the American Revolution.

When you think about it, every week should be Small Business Week, because America is small business, Reagan said, noting that small businesses accounted for nearly half of the jobs in the country. (And thats what makes this such an effective political tactic — millions upon millions of Americans own or are employed by a small business.) We came to Washington confident that this small business spirit could make America well and get our economy moving again. Well, its working.

Every president since has at least talked the talk when it comes to small businesses. (The Obama administration boasts on its website that it has enacted 18 tax cuts for small businesses and has approved 334,815 small business loans totaling $163 billion through the Small Business Administration.) And many of Cruzs likely competitors for the White House seem downright eager to continue the pattern and talk up the importance of small businesses.

During a speech in January, former Secretary of State Hillary Clinton said that one of the biggest problems facing the United States today is that the country isnt adding enough small- and medium-sized businesses to the economy. Last October, Sen. Rand Paul stopped by a business roundtable in Iowa to talk with local entrepreneurs. As the governor of Texas, Rick Perry supported a tax cut that affected more than 40,000 small businesses. Wisconsin Gov. Scott Walker hosts an annual small business summit to give entrepreneurs in his state a chance to interact with members of his cabinet.

The roots of this outreach — more cynical political observers might call it pandering — stretch back to colonial times, according to Robert Wright, a professor at Augustana, a college in Sioux Falls, South Dakota. Jefferson was constantly talking about the yeoman farmers and how they were the backbone of the economy, Wright said. He also talked about how artisans had to be protected from foreign competition.

Presidents Madison and Monroe presided over a time when the American economy began to see the rise of indigenous corporations like the textile mills in New England and the iron foundries in Pennsylvania, which were putting artisans out of business. Jeffersons successors often found themselves rhetorically rising to the defense of the small business class against the wishes of larger companies.

The Industrial Revolution later ushered in the era of big business, all but muscling out the small business person as a key political constituency. The 20th century saw the rise of the mega-conglomerates and the service economy. After World War II, its the heyday of the big corporation, Wright said. We get General Electric, General Dynamics, and General Mills — these highly, vertically integrated companies that become the place to work as opposed to striking out on your own.

But as with most things in politics, the issue has come full circle, and were back to a point where candidates are once again talking about the importance of small businesses. This time around, instead of talking to farmers about their landlords or artisans about trade protections, our politicians will most likely have plans that include decreasing taxes, relaxing regulations, and perhaps tinkering with the minimum wage. But one thing will be the same: In 2016, every major candidate will be talking about how small businesses built America, and how they will keep building America.

March 30, 2015 · Getting A Mortgage · Comments Off

More than seven in ten Britons believe getting a mortgage or remortgaging is a serious problem in todays housing market, despite rock-bottom rates, according to research.

As many as 32 per cent of those polled by YouGov said the ability to get a mortgage is a very serious problem, while a further 40 per cent said it was somewhat serious. By contrast, only three per cent of adults said it was not a problem at all.

Divorced and separated people are most likely to be concerned about the availability of mortgages, with 80 per cent saying getting a mortgage is a serious problem, in comparison with 71 per cent of married couples.

March 29, 2015 · Getting A Mortgage · Comments Off

Q My sister and I have each just inherited a half share of a property from our late mother and father. The estate has been finalised and ownership of the property has been updated on the Land Registry to reflect this.

I would like to buy out my sister’s half and live in the house myself. My question is regarding taxes liable from buying her share. Speaking with my sister, we have agreed that she would be willing to sell me her half with monthly payments from me. We would prefer doing this as it would work out cheaper than getting a mortgage from a bank.

Will she be liable for any taxes – eg income tax – on these monthly payments? I know she will not be liable for capital gains tax as she will only be receiving the value of her share of the inherited house. The property is valued at pound;150,000 and I would be making monthly payments to my sister of pound;500 until I have paid her the total of pound;75,000 for her half. NA

A In agreeing to let you buy her share of your parents’ house in monthly instalments, your sister is being incredibly generous. She is essentially giving you an interest-free loan – which won’t be repaid until 2027 – and giving up the interest she could earn on a lump sum of pound;75,000 if you were to buy out her share all in one go by taking out a mortgage on the property.

If she transfers the property into your sole name before you’ve paid her the full pound;75,000, she’s also taking a risk that, as she would no longer own any of the property, she would have no control over it and couldn’t force you to pay what you owe her. It would be more in your sister’s interests to wait until you have paid her in full before transferring ownership to you. But the downside of doing that would be that if the house rises in value over the 12-and-a-half years it takes you to pay for her share, she could face a capital gains tax bill.

Contrary to what you say, there is a potential taxable gain if, on disposal of her share (ie, when she transfers ownership to you) the value of the property is greater than its value when she acquired it (taken to be the date of death of the parent from whom she inherited it). But you are right that the gain would be zero if the value on disposal was the same as the value on acquisition.

If your sister was charging you interest on the money she is effectively lending you, the interest would be liable to income tax. But as the money you are paying her is just return of capital, there’s no income tax bill.

Finally, I’m not sure why you think that the very one-sided arrangement you are proposing – which works entirely in your favour and has little to recommend it from your sister’s point of view – is preferable to your getting a mortgage.

For just pound;17.50 more than the pound;500 you plan to pay your sister, you could get a mortgage of pound;75,000 with an interest rate of 3% and a term of 15 years. And your sister would get a cash lump sum of pound;75,000 and no worries.

Muddled about mortgages? Concerned about conveyancing? Email your homebuying and borrowing worries to Virginia Wallis at virginia.wallis.freelance@theguardian.com

March 29, 2015 · Fundings · Comments Off

NewsHubby: DIY Press Releases for Tech companies

By Rafael Lemarchand, March 26, 2015,
LeaveaComment

Every hard-boiled start-up will know the importance of PR. It’s a domain where your companys self-image spearheads every decision, and how to present, improve and spread that image around is certainly a skill in itself. Often this skill involves writing press releases, the most straightforward way to get your news into the hands of journalists.

Now you may have read our five tips for writing a press release (if not, we strongly recommend you do), and if so, you’ll know that writing a good press release is not something you’ll do in ten minutes. Or is it?

It could be, at least according to NewsHubby.Newshubby is a DIY press release creation platform that puts you through a formatted, easy to use journey to construct, host and distribute your press releases. The way it works is pretty straightforward: you choose the type of press release you have in mind (ie funding announcement, product/feature launch and so on and so forth), set the release date of your press release, and answer some questions regarding the chosen topic (provide a quote, provide title, add links etc); and with a simple click your press release is automatically generated for your use. If the result is to your liking, the platform offers to send the press release to the relevant media (for a price, that is).

Of course youll need to sign in, and from here on you will be introduced with a set of question that will work as a base template for your future press releases. This part could indeed take some time to complete and for good reason as the questions are the fundamental pieces of information that will shortly elaborate on what your company does, how it does it, who does it compete with, how is it funded etc (which is also why you should ensure your answers are neat, clear and matter-of-fact). After this bit, the doors of creation are opened to you.

Alexandra Bylund, founder of NewsHubby and co-founder of image stock platform Foap, comments how the press release start-up first came to life:

“The idea came from when I was working in my former startup, Foap. We were very successful in reaching out to media worldwide. We were even featured on international TV several times. This was when we launched the company or when we got bigger fundings. We didnt tell the world about other important things that happened through the journey though. For example when we got huge brands as customers etc. We were so focused on the product, the team and the sales that we simply didnt have the time to create press releases. After Foap I wanted to simplify the whole PR process to actually make it possible for companies to reach out in a quick and simple way”

And this is where NewsHubby’s blessing, as well as curse, kicks in. Tech writers will equivocally tell you that the right hooks in a press releases can make a huge difference in the quality of the article (or determine whether an article is written or not). It’s understandable that smaller businesses may feel that they have better things to do than write press releases from scratch. but that should really depend on the circumstances of the announcement itself: Smaller announcements, and stuff that really does not have that much context to provide in the first place, can be turned into press releases but in the case of announcements of bigger importance, it might well be worth your while just writing the release yourself.

Characterless or rushed press releases are a pain to read, however, a platform like NewsHubby could just as well deliver a tool that truly facilitates media relations by making press releases much easier to come up with. In the end, sending an dull press release is better than sending no press release at all, as long as all the information is in place. There are two sides to the coin.

Typically, NewsHubby’s clients are all kinds of companies who want to reach out to worldwide media, but for now NewsHubby focuses on the European and US tech industry. The company currently runs a freemium model, which means access to the DIY service for creating press releases is free of charge. The number of DIY guides are limited to only a few types of press releases, however. Distribution costs $700/ press release.

The Premium membership – $140/ month (minimum 3 months subscription) – grants you access to all types of press releases as well as unlimited amount of press releases distributed.

NewsHubby competitors include PR.co, PR Newswire, Pressfriendly and Pressking.

NewsHubby also has a pretty interesting (and active) blog, so in case youre interested in gaining insights into the nature of press-releases, do check it out.