Opening a small business is hard, and the fact that four out of five business owners are denied bank loans and have to use pricier for-profit lenders instead makes it even harder. Fundera is a startup that’s trying to make all this easier. Connecting small business owners to the lenders that are right for them, as well as guiding them and educating them throughout this process, the New York-based startup is tipping the scales in business owners’ favor, getting lenders to compete for their business for the best rates.
We sat down with Jared Hecht, Founder and CEO at Fundera, to learn about how Fundera got its start, and what the brand is doing to connect with and inspire business owners everywhere.
What is Fundera, and how does it work?
We’re an adviser to small business owners that helps entrepreneurs understand their creditworthiness, educates them on the different types of credit products for which they’re eligible and empowers them to make great decisions about the type of financial products that they should be using to help responsibly grow their business.
The way it works is pretty simple. A small business owner comes to Fundera and provides us with information about themselves and their business. We help them understand all the components of that information and how it may impact their creditworthiness. We show them all the different products and lenders within our network for which they’re eligible, help them compare the different rates and offers and then help them submit an application or buy products entirely objectively.
Then we work with them over time to help them improve their creditworthiness so they can continuously get access to lower and lower rates. So you can think of it as a hub in which all small business owners can successfully make the right decisions around what type of credit products they should be using.
What was the initial inspiration for Fundera?
The inspiration was my cousin, who’s a great entrepreneur and small business owner in Ohio. He has a chain of restaurants there called Fusion, which is a casual restaurant where you create your own sushi. When he went to a bank to ask for a loan to open a new location, he was rejected by all of them.
That was crazy to me, because he’s a very successful small business owner, and both his locations were turning a profit. We’re talking about $300,000 with a proven business model and a business owner who’s been operating successfully for four years—it was a huge red flag for me.
My curiosity was piqued, so I went online with my cousin and we just started to see what his online lending options were, but we couldn’t make sense of it. All we could find were a ton of different ads for lenders, brokers, brokers disguised as lenders and vice-versa. There was no source of truth out there, and no easy way to understand which products are right for you.
That service exists in almost virtually every other industry, so we saw an opportunity to bring that change to the world. That was the inspiration behind Fundera.
Do you have any examples of successful small businesses that you have worked with?
Absolutely. Some of them are small business owners who came to us after having gone to other lenders or other service providers before and weren’t educated about what their options. We’ve been able to save them anywhere from a $1,000 a month to in some instances $20,000 a month, simply because they ended up in the wrong product. Others have kept growing and reached new heights.
Our conference rooms are all named after small business owners that we’ve helped. I’m sitting in one right now called Hickies, which is a no-tie elastic shoelace company based in Brooklyn that sponsors a lot of PGA players, and have become shoelace of choice for professional golfers.
And then there’s a lot of other stories about small business owners who came to us and were kind of in a tough place. Their personal credit score was tarnished, and they were only eligible for the more expensive types of products. We were able to work with them over time to the point where they were able to graduate into better and better products, and ultimately got SBA or bank loans through Fundera.
So in all these instances, customers were able to get access to great types of financial products because we’re able to provide them with that educational guidance, and there are many that I’ve now been a customer of for the better part of a decade.
What does the Fundera brand stand for in the mind of your audience?
Well, I want them to think that they finally found a real partner who can act objectively and be unbiased, and who is going to be on their side with them for the long haul. A partner that provides them with the tools, resources, and information they need to make the right decisions. And a partner that’s also going to provide them insight that they would not get anywhere else in regards to how their business is performing, what their creditworthiness actually looks like, and what they can do to improve upon those things over time.
So, really, in a perfect world we’re the trusted adviser to all small business owners as they begin to grow and think about how they can do so most effectively.
Fundera client Bonfire Brewing
How are customer expectations changing among small businesses, and how does this affect Fundera’s approach to its brand?
Small business owners have become much more accustomed to the Internet. It used to be that a business owner would make all their financial decisions by walking into a bank.
Now the expectation is that they will be able to make their financial decisions or at least educate themselves, by reading literature or using a service on the Internet. So the expectation is that the information that they need is going to be at their fingertips, which is why we decided to build this business, and fortunately, I think we were right. The Internet does this to every single industry, it just hadn’t happened to the world of small business credit.
Fundera client Snow Owl Coffee Roasters
The other thing is that small business owners are busy, and they have the expectation that they’re going to get to an answer quickly. So we need to make sure every experience is tailored to the customer, because no two small business owners are the same. Every single one is insanely unique. They should be treated differently, and that expectation that their experience should be transparent is something we’ve had to adapt to create a different experience for every borrower.
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