Online Loan Help for Entrepreneurs
Several banks and community organizations on Thursday launched the financial equivalent of an online matchmaking service for small Los Angeles companies seeking money.
Called the Los Angeles Small Business Loan Portal, the service gives small-business owners a new way to attract lenders that traditionally might have turned them down.
“It’s like a LendingTree.com, but for entrepreneurs and small businesses,” said Vivienne Lee, vice president of community relations at Citibank in Pasadena. “This is a comprehensive way to have it streamlined and efficient.”
The website, at www.loanportal.org, was created after the Koreatown Community Development Roundtable found that many of its nonprofit member agencies were having trouble making matches between lenders and their small-business clients, some with blemished credit histories. Business counselors said they spent too much time shopping client applications to lenders, which had widely varying requirements for approving loans.
“Any client can just walk into a bank and get a loan,” said Cooke Sunoo, who heads the loan program, which is open to all Southern California businesses.
“But if you’re a sub-prime borrower ... then this is not a bad alternative.”
Linda Ortega, a spokeswoman for the Federal Deposit Insurance Corp., sponsor of the Koreatown group, said the program might be the first of its kind and that the agency would like to help the venture expand nationally. The idea was well received at a meeting of bankers from around the country last year, she said.
“That’s the way these things work,” Ortega said. “It starts as a seed and then it flourishes.”
Entrepreneur Al Austin said he was looking forward to it. His training company, Learn2Excel, needs money to support online education projects he is coordinating in Africa, he said.
“Small businesses always struggle with finding adequate funding,” Austin said. “A lot of them are entrepreneurs by nature, but they’re usually very visionary. They have all this energy and passion, but not enough infrastructure.”
About 50 potential lenders got their first look at the website Thursday during a demonstration at a Los Angeles hotel, where they sipped coffee as they reviewed online profiles. The profiles include the purpose of the loan and the client’s requested loan amount, years of experience, credit score, collateral, income and debt.
One profile listed a less-than-stellar credit score of 560. Another loan seeker offered as collateral a house in Mississippi that he owned with his brother. Both profiles brought chuckles from the bankers.
“These are not the most bankable persons on Earth, but there’s a chance they’ll be successful,” Joyce Chan, a business counselor for Chinatown Service Center, told the lenders.
Small-business owners seeking to post their needs on the website must first go to a participating business assistance organization, which would be listed on the site. Those nonprofit organizations make sure their clients have all their business and financial documents in order and then post a profile on the portal for lenders to consider.
Banks aren’t privy to clients’ names until they click a button at the bottom of the profile that indicates they’re interested in making a loan.
Institutions that make loans through the site earn Community Reinvestment Act credits, an incentive that would prove their involvement in the community and allow them to open branches elsewhere, said Carlos Franco, a vice president at Washington Mutual, who attended the presentation.
“Besides, the more businesses we have in the community, the more potential there is for growth in the community, for the businesses and for us,” Franco said.
“This is bridging the gap between the potential borrower and the lender.”
The service is free to clients and the nonprofit agencies, Sunoo said. Banks pay a $5,000 membership fee.
The one-stop shopping that the website provides comes as a relief to Nancy Kikuchi, a business counselor for the Asian Pacific Islander Small Business Program.
“By the time I’ve called the sixth bank, I’ve got this nervous tinge in my voice,” Kikuchi said. “So I’m very happy with this new loan portal. It will save me so much time.”
