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Like many who worked in mortgage lending in the United States, Madeline Wade and Robert Gloer had a front-row seat to the devastation caused by the housing crisis of 2008, especially to small business owners.
Around that time Wade and Gloer met Phil Marleau, founder of Canada’s first peer-to-peer lending service, IOU Central. The three of them discussed alternative ways to provide small business owners the funding needed for their businesses to survive the tumultuous period.
“After the credit crisis, many banks that had previously given lines of credit or home equity loans to small business owners started to scale back their lending,” says Wade. “Small business owners were having a difficult time accessing the capital they needed for inventory, equipment, and growing their business. We saw a gap in the market and realized we could make a big impact in the small business arena.”
Together Marleau, Gloer, and Wade pivoted away from peer-to-peer lending and founded IOU Financial, with the goal of helping small businesses access the capital they needed quickly.
Today, IOU Financial offers small business loan products across most American States and almost every Canadian province, with the exception of Quebec. Products range between $10,000 and $500,000 in the US and between $10,000 and $150,000 in Canada on six, nine, 12, and 18-month terms.
Wade, IOU’s VP of Operations, explains that many of IOU Financial’s customers would qualify for a bank loan, but don’t have time to go through the lengthy application process and wait months to receive the funds, so they seek funding in the alternative lending space. “We are very competitively priced in the industry, and in a lot of cases, the best price out there,” she says.
Instead of going through the bank process, small business owners can fill out the three-step online application at IOUFinancial.com in a matter of minutes and receive approval almost immediately.
“We’re talking about a 10-minute application. In some cases, we can issue an approval and funding the same day provided we have all the documentation needed,” says Wade. She adds that the company also understands the importance of informing an applicant when their request has been declined, in a timely manner.
“Our customers know where they stand once they submit the application. Our system notifies them immediately if they do not meet the minimum criteria; It’s important for us not to waste anyone’s time or effort,” says Wade.
“After the application is submitted, one of our loan officers reaches out to the merchant to better understand what he or she needs and how funding is going to help their business,” says Wade. “Our loan officers do a great job of educating the merchant about what they can expect from our loan and how the repayment structure works.”
In order to qualify, Canadian small business owners need to be in business for at least one year, have a minimum credit score (ERS) of 580, and have at least $10,000 per month in revenues.
Borrowers have the option to pay back their loan on weekly or daily payment cycles, the latter of which Wade says is preferred by small business owners that earn daily revenue over large lump sums. Furthermore, once a borrower pays down the principal, they are eligible for another loan.
Since issuing its first small business loan in 2009, IOU Financial has funded over $700 million in small business loans, out of nearly $11 billion in applications received.
Wade adds that IOU Financial was founded to support small business owners, not just financially, but also through excellent customer service, client’s cashflow preservation and a commitment to transparency.
“It’s really important for us to make our customers’ needs a priority and provide whatever help we can for whatever needs they have,” she says. “The success stories we see every day excite us about making a difference and helping the merchant achieve their goals for the business. That’s how we know we’re heading in the right direction.”
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