Alternative Lending Being Given a Boost
2. Accel Partners, investors in Facebook, Groupon(GRPN) and Etsy, announced plans last week to inject $30 million into Capital Access Network -- the largest alternative capital provider to small businesses in the U.S., funding more than $2 billion in capital under the brands NewLogic Business Loans and AdvanceMe.
"From our work with small businesses, it's clear that one of the most pressing issues for merchants is access to credit and working capital," Accel partner Kevin Efrusy said in a statement. "Especially today, banks are unable to play effectively in this market. Large institutions cannot reach, evaluate or serve small businesses efficiently. Many newcomers to the finance space are constrained by limited access to and very high-cost capital combined with high portfolio losses given unseasoned risk-scoring models. Capital Access Network has by far the strongest team, scale and data-driven approach to this market."
3. Stone Point Capital is investing $100 million into Access Point Financial, a venture it created to provide financing to the hospitality sector.
More big names plan to launch alternative funding products in next two months, Arora says.
What you need to know
Businesses should do their due diligence on lenders and be prepared.
"Access to credit is a lot better compared to the last three years. The challenge today is, unlike 2007 where you go into a bank and got a
While 2012 looks better, small-business owners should still be aware of the macro-economic conditions.
"If they're planning to do something three or four months down the line, then they should do it now, because market sentiment is better. Over the next three to four months, nobody knows what's going to happen. If things turn again, it will impact access to credit," Arora says.
-- Written by Laurie Kulikowski in New York.
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