Nation’s Top Online Small Business Lending Platforms Organize to Advance Industry Standards
OnDeck, Kabbage and CAN Capital join forces to advance best practices and development of a new model disclosure to empower small businesses when assessing and comparing loan options.
The nation’s three largest online small business lending platforms – OnDeck® (NYSE: ONDK), Kabbage, and CAN Capital – today announced the formation of the “Innovative Lending Platform Association,” which will focus on advancing small business online lending education, advocacy, and best practices. To promote common disclosure verbiage and standardization, the new group’s first priority, launched in partnership with the Association for Enterprise Opportunity (AEO), the leading advocate for microbusiness in the United States, will be an initiative to create a model small business lending disclosure called the SMART (Straightforward Metrics Around Rate and Total Cost) Box. The SMART Box will present a small business with a chart of standardized pricing comparison tools and explanations, including various total dollar cost and annual percentage rate metrics that enable a comprehensive pricing comparison of loans of equivalent duration.
The formation of the Innovative Lending Platform Association and the launch of the SMART Box initiative follows an in-depth analysis of the small business marketplace that began in 2015 and is informed by small business organization survey data, including recent findings from an industry study underscoring small business customer preferences and priorities. Starting today, the Association is open to all small business lenders and stakeholders to engage on the SMART Box initiative via www.innovativelending.org.
The SMART Box initiative will be open to industry stakeholders for engagement to ensure that the new model disclosure is comprehensive, well-informed, and truly empowers small business borrowers to make an apples to apples comparison for different lending options. The AEO, with the mission of creating economic opportunity for underserved entrepreneurs, will serve as the engagement facilitator, and process feedback received from interested stakeholders.
Together the three founding companies of the Innovative Lending Platform Association have provided access to more than $12 billion dollars in working capital to small businesses to help drive growth and hiring.
Beginning in June 2016, the Innovative Lending Platform Association will commence a 90- day “national engagement period” in which it will seek feedback on the SMART Box initiative from interested lenders, trade associations, policymakers, and non-profit organizations. In September 2016, the Innovative Lending Platform Association will encourage those interested in promoting the responsible development of the small business lending industry to voluntarily adopt or support the model disclosure.
Founding Member Quotes
“OnDeck is one hundred percent focused on responsibly serving small businesses and we are proud to join other industry leaders in this groundbreaking initiative to establish transparency best-practices that benefit the marketplace,” said Noah Breslow, chief executive officer, OnDeck. “In the days ahead, we look forward to working with other lenders, trade associations, policymakers, and non-profit organizations to create a national model for small business lending disclosure.”
“As our industry rapidly evolves, we believe it is critical to provide the tools and transparency businesses need to make informed borrowing decisions,” said Kathryn Petralia, co-founder and COO of Kabbage. “We founded Kabbage based on the fundamental premise that businesses can use the power of their own data to grow in ways never before thought possible. We are thrilled to take our commitment to SMBs to the next level by joining this group of fintech leaders to launch a clear methodology for how fees are calculated and communicated to borrowers. We look forward to continuing this open dialogue with our peers, customers, policy makers and regulators to support small business growth in the United States.”
“Ever since our company was started by a small business owner 18 years ago, CAN Capital has believed that the key to the success of our industry rests on the success of the small businesses we serve,” said Daniel DeMeo, chief executive officer, CAN Capital. “This means providing clear disclosures on pricing, ensuring products are represented accurately and providing the highest level of customer service. We are excited to work with our fellow leaders in alternative small business finance and other stakeholders in the sector to publish best practices that can help support the small business owners that are the backbone of America’s economy.”