Finance startup aims to play matchmaker for SME loans

In its first two days of release, Australian startup Loandesk, an online service that helps small businesses find loans, secured more than 1.5 million loan requests from users, according to co-founder and director Leigh Dunsford.

Its service automates the often strenuous task of searching for suitable loan providers manually, and filling out multiple applications forms, replacing them with a single form before quickly matching them with potential lenders.

Requests have dropped off since the launch two weeks ago, but Dunsford says the service has been steadily adding lenders at an average of two per day.

He says the service caters for a wide variety of borrowers, but its biggest demographic is businesses that have been operating for between one and three years and might have trouble securing a loan from banks.

Loandesk is currently partnered with 33 lenders, and another 70 are yet to be integrated into the system.

“Traditionally, a borrower would go to a financial adviser, an accountant or their bank to find a loan,’’ Dunsford says.

“Going to the bank, nine times out of 10 they will generally not be approved for a loan, then they turn to the net to find another party, but searching takes time and there’s a lot of hassle.

“The trouble is that entrepreneurs don’t even know that these options are out there and tracking down these lenders can result in a huge waste of time and money.

“The difficulty is in finding the right type of loan fit or lender from a borrower’s point of view.”

In addition to the lenders, Loandesk is also partnered with third parties, which offer access to legal advice, accounting, booking and credit reporting agencies.

It doesn’t cost a business anything to use the Loandesk service, which makes its money from lenders who pay for each qualified borrower sent.

Dunsford says while Loandesk might be the first service of its kind in Australia, it is a proven model, with a similar offering available in the United States.

The Loandesk team spent 12 months behind the scenes to ensure it gets its recommendations to users right.

“We’ve been developing our algorithm with lenders to help us come up with a nice balance of questions we need to ask,’’ Dunsford says.

“It’s a dynamic form, so what we’re doing is getting the borrowers to the point of pre-approval, its cutting down time.”

With the launch behind them, Dunsford says there are plans to revisit the algorithm with lenders to ensure it’s producing the best possible results while incrementally updating the service.

This piece originally appeared at StartupSmart.