LoanWise.Com Aims to Deaden the Pain of Small Biz Loan Process
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Most small businesses find the traditional bank loan process a painful, time-consuming, frustrating and frequently demeaning process that substantially diminishes the psychological rewards of entrepreneurship and can divert valuable resources from the task of actually making money. After a couple of assaults on the black granite ramparts of the banking system, most small business owners quickly learn the mantra that, "Banks only lend you money when you don't need it."
Founders Mike Grossman, former marketing manager for Quicken's CD-ROM version, and Scott Belser, who has been a brand manager for Johnson & Johnson, learned from their first Web effort, America's Small Business center, that more than 40 percent of the searches by small businesses were for loans. This prompted them to narrow their focus to loans and credit. A companion service, CreditFYI offer the ability to get a credit check on a small business for $4.95 to $14.95 depending on the detail purchased.
The CreditFYI service and the site's ability to offer a quick decision on a loan is enabled by their strategic relationships with data consulting firm Fair, Isaac and Experian. VC Watch tested the system and found the form filling and decision process took less than ten minutes.
The company was launched in 1996, launched CreditFYI in 1998 and LoanWise.Com earlier this year. The company said its loan volume so far is about $20 million and that the amounts are typically $35,000 to $50,000.
NetEarnings has received a total of $14.8 million in three rounds of financing: $560,000 in January 1998, almost half from friends and family and the rest from Interwest Venture partners and Irwin Financial Corporation; $3.5 million in November 1998 from Irwin and NAC Reinsurance Corporation; and a $10 million third round this August from Kleiner Perkins, XL Capital and Irwin.
Analysts say that LoanWise.Com has a good first-to-market advantage but needs to rapidly increase its base of lenders in order to maintain its position in the face of inevitable competition.
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