The world of alternative finance has come on strong in recent years, and more and more small businesses have begun turning to it in the search for favorable loan terms and/or alternatives to borrowing from banks. But the world of online lending can be an uneasy transition for many business owners who have always relied on banks for loans. Here’s a breakdown of what alternative finance has to offer startups and other small businesses.
The AltFi Advantage
Marketplace lending is just one new addition within the alternative finance landscape. The lending platforms advertise several major benefits to borrowing money from a marketplace lender versus using traditional banks. The advantages start right at the applications process. Most marketplace lending websites boast quick and easy loan application processes that can be conveniently completed from the comfort of home. Not only does the borrower get to avoid the hassle of going to a bank branch and dealing with bank bureaucracy and long waits, online lending platforms don’t have to pass the inherent costs of operating brick-and-mortar bank branches on to customers. Marketplace lending also promises a fair share for borrowers with less-than-ideal loan applications. For some borrowers, credit scores and credit history may not be up to bank’s restrictive standards. A first-time borrower that is funding his or her startup has likely never applied for a business loan before, and the banks will often penalize borrowers for lack of experience. In addition, many banks limit their underwriting activity to large business loans. It costs banks about the same amount to process a $50,000 loan as it does to process a $1 million loan, but they profit much more off of the larger loan. Therefore, a small business owner in need of a micro-loan (less than $35,000) may be rejected by banks even if he or she has a perfect credit history. This gap is bridged by marketplace lending loans where borrowers enjoy the benefit of not being defined by the rules established by banks. With the ability to take out personal loans ranging from $500-$100,000, a small business now has a resource for overcoming the rejection from banks. A borrower could have their application approved in a matter of hours and money in their account within days. Finally, the marketplace lending process promises to deliver more transparency and more control to the borrower. Both lenders and borrowers, through the online platforms, have clarity into the processes, fees, returns, and other variables associated with this new alternative financing option.
What’s Holding Business Owners Back?
Despite the explosion in popularity, many businesses are not taking advantage of the opportunities that marketplace lending claims to offer. According to a Manta survey of small business, many business owners are not comfortable with the technology involved in this lending process. Thirty percent of those surveyed reported being “unsure” of the risks involved in alternative lending options, 20 percent claim they do not understand the technology involved in the process, and 14 percent reported that they do not trust marketplace lenders.
But lending startups are on the map now...
The appeal of marketplace lending has caught the attention of a growing number of new startups. According to The Lending Mag, P2P loan startups raised $15 billion in funding in 2014. Data from CB Insights indicates that funding for lending companies is continuing to grow dramatically each year. In Q1 of 2015 alone, various lending startups have raised an estimated $385 million combined. It appears as though, for now, many business owners and entrepreneurs are still waiting for marketplace lenders to establish more of a track record before jumping on board, but the numbers prove that it is already making a major impact on the business world.
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NEW YORK, NY, March 15, 2022 -- Even Financial ("Even"), the category-leading embedded finance marketplace and independently managed subsidiary of MoneyLion, Inc. (NYSE: ML), has announced a new partnership with Tally, a leading financial automation company, to include the company's low-interest credit offerings on its platform.
"Tally has built a powerful tech-enabled system to help people solve one of the biggest financial problems today: paying off credit card debt," said Phill Rosen, Founder and CEO of Even. "We're thrilled to welcome Tally's line of credit offerings to Even's unparalleled network of financial services providers."
Tally is designed to help its members pay off their debt faster and save them money on interest and late fees. Members can lower their monthly payment with Tally's lower-interest line of credit, if eligible. Typically, at least a 580 FICO score is needed. Tally's system is customized to save people as much money as possible.
"Americans today owe nearly $1 trillion in credit card debt. We know from our research that many want to pay down their debt but struggle to get started. That's where Tally comes in," said Jason Huynh, VP of Credit, Analytics & Operations at Tally. "Our system combines financial automation with a low-interest line of credit to give people the help they need to get on track to pay off their credit card debt for good. We're thrilled that our partnership with Even will allow Tally to help even more people."
The launch of Tally on the Even platform enables consumers to get matched with Tally's custom, low-interest line of credit accounts of up to $25,000 in just a few minutes. After getting matched, eligible consumers complete the process through the Tally app. There are no out-of-pocket costs.
Tally is the latest partner to join the Even marketplace, a growing network of over 400 financial services partners and 500 channel partners covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. Even's marketplace technology enables any company to add financial products to its business, with full compliance and security, at scale.
About Even Financial
Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2021 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at www.evenfinancial.com.
Tally is a consumer financial tech company pioneering full-service financial automation to help people save money, pay down their debt and reach their goals sooner. Founded in 2015, the company built the first fully automated debt manager to help put billions of dollars back in people's pockets. In 2021, Tally was named to Fast Company's Most Innovative Companies list and to Quartz's Best Companies for Remote Workers. Previously, Tally made Forbes' Next Billion Dollar Startup list, Forbes' Fintech 50 list, and the app won Real Simple's Smart Money award. Learn more at meettally.com.
NEW YORK, NY, April 19, 2022 -- Even Financial (“Even”), the category-leading embedded finance marketplace and independent subsidiary of MoneyLion, Inc. (NYSE: ML), has announced it has now facilitated over $5 billion in consumer credit, as of March 2022. Leveraging machine learning and advanced data science, Even solves a significant pain point in financial services customer acquisition by seamlessly bridging financial service providers and channel partners via its industry-leading API and embedded finance marketplaces.
“Surpassing $5 billion in consumer credit facilitated through our marketplace is an enormous achievement for Even as we continue to help build the future of finance technology,” said Phill Rosen, Founder and Chief Executive Officer. “Access to credit has long been a challenge for many hard-working Americans, and we are dedicated to alleviating this issue by providing consumers personalized financial services offers that meet their needs, when they need it most. Reaching the $5 billion milestone reaffirms that our mission is driving significant value for both consumers and our partners."
Even has grown its embedded finance marketplace offerings beyond loans to cover a breadth of additional financial services including credit cards, mortgages, savings, and insurance products. Within loans, Even offers the largest network of premium, connected loan providers - across a wide array of products including unsecured personal loans, secured personal loans, line of credit, student loan refinancing, and auto loan refinancing. Leading financial services providers, such as LendingClub and SoFi, partner with Even to reach qualified consumers searching for loans, benefiting from Even’s unparalleled network and native integrations.
The company has continued its rapid growth trajectory in 2022, growing its network to include over 400 financial services partners and 500 channel partners. Even's marketplace technology enables any company to add financial products to its business, with full compliance and security at scale. Earlier this year, Even announced the close of its acquisition by MoneyLion, the award-winning digital financial platform, which will continue to advance their combined efforts of providing financial access and advice to hard working Americans.
About Even Financial
Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2022 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at evenfinancial.com.