Speed to Market Outweighs Cost For Small Biz Borrowers Says Biz2Credit
May 6, 2013
By Bob Coleman
Editor, Coleman Report
We sat down with Rohit Arora, CEO & Co-Founder of Biz2Credit to talk about how speed to market, getting cash to small business quickly, has become a top priority for main street.
Bob Coleman: Rohit you have a lot of data that you accumalate from your credit database of 6000-7000 applicants, tell me why you think that reflects accurately the state of small business lending.
Rohit Arora: We have analyzed the data at Biz2Credit for the past five years. We brought out the Biz2Credit Small Business Lending Index to be reflective of the scale and mass of small businesses.
We did three things, first we divided our applicants by the various states and metropolitan areas as per the US census population. Let’s say California is number one, out of the 1,000 applicants that we look at, California has the same posting date in our pool. Texas and New York followed and so forth.
The Second thing we did, especially for our Small Business Lending Index analysis, we researched business that have been in business for more than two years and have a prior business relationship with the bank. That’s having an apple to apple comparison for businesses that have to borrow from banks or alternative lenders. That could be for various reasons. One reason is that banks are not willing to lend them money. The second reason could be banks take too long.
Bob Coleman: Speed to market is critical.
Rohit Arora: That is actually more critical in this market than the cost of money because a lot of business owners need working capital quick.
Bob Coleman: Absolutely
Rohit Arora: They cannot wait for the next two months with all of the suspense. That’s how we started building our index. Then we divided it by big banks, meaning over $10 billion in assets. Then we compared small banks and alternative lenders, credit unions, and community institutions.
Either non-profit or for-profit, they have a mission to help a lot of start-ups, ethnic and minority owned businesses.