LQD Business Finance, a Chicago-based, technology-enabled alternative lender that provides small and medium-sized businesses with structured loans, announced breakout business results in 2016, its first full year of operations. Last year, LQD grew its flow of loan applications to over $140MM and loans closed to $33MM. In addition, the company closed a significant Series A funding round, complementing the $30MM credit facility secured in 2015.
“LQD is the next generation alternative business lender. Early alternative lending businesses were important but incomplete, and they have struggled recently as a result. LQD has internalized those lessons into a strong and sustainable business model,” said George Souri, LQD’s founder and CEO. “Besides our strong new loan performance, we expanded operations with a new website and key hires, and we are positioned to scale.”
Looking ahead, Souri said LQD anticipates growing its origination run rate to $80MM by the end of 2017 and to more than $200MM over the next 24 months, largely by expanding its data-driven lead generation and targeting the $200B market of prime and near-prime loans between $250K and $5MM. That market is underserved by both banks and existing alternative lenders. Additionally, LQD is in partnership talks with several banks interesting in the company’s underwriting platform.
Sustaining Substantial Financial Growth
LQD Business Finance uses sophisticated technology to make the loan process more efficient without compromising underwriting quality. “Many of the early alternative lenders were technology companies trying to do credit. We are credit and finance people using technology to make us better at our core competency, and the markets are reacting very positively to our approach,” says Souri. LQD closed a $30MM credit facility with Route 66 Ventures and a $4MM Series A with Fintech Ventures Fund. LQD is in the process of closing another $100MM credit facility, as well as a follow-up equity round.
Serving the Growing Market of Underbanked SMBs
Leveraging an integrated business and data-management platform that applies sophisticated credit analysis, seen typically only in the large-cap market, to small and medium-sized businesses, LQD is able to address a growing market gap for prime and near-prime business borrowers. The company is the only alternative small business lender with risk-pricing capacities able to model a distribution of future outcomes based on probability and price a loan based on its distinct risk criteria. According to Robert Peterson of Route 66 Ventures, “We have seen almost every alternative business lending platform in the market and LQD is one of the best, if not the best, when it comes to underwriting and risk.”
“Before LQD, either underwriting was done well but took a very long time, or underwriting quality was sacrificed for the sake of quick closings. LQD fixed this fundamental problem and services a wider range of businesses with more customized financing as a result,” says Souri.
As more small business owners search for alternative sources of capital, LQD’s unique model has become a source of financial relief for many.
Norcal Fire Repair Inc., of Vacaville, California, found that LQD could help bridge the gap between a slow cash flow cycle, moving the company’s construction along quickly and more efficiently. Norcal President Zach Minor chose LQD over competitors because LQD had the best terms and most flexibility available in a single loan product. According to Minor, “Most lenders who want to fund a business like ourselves want to do shorter terms and higher rates. Out total interest expense will be about one-third of what most other companies would charge on the same amount. “Minor added, “LQD is the only company I talked to that seemed to listen and consider all the variables of our industry. The people at LQD actually analyze the data and think for themselves rather than running it through a computer and letting the computer spit out an answer based on only a couple of variables.”
Advancing the Industry Through Thought Leadership
To help increase awareness of LQD’s disruptive approach to business lending, Souri participated in serval industry events throughout 2016. During the Lend360 event in Chicago, he participated in a panel discussion on innovations in alternative credit underwriting with other leaders in financial technology and online lending. The session highlighted the need for greater data quality vetting and consideration in small business lending.
Additionally, LQD exhibited at the Midwest Account & Financing Showcase in August and American Banker’s
Digital Lending & Investing event in September, as well as their Small Business Banking Conference in November.
Looking Ahead
As the alternative lending industry continues to mature, LQD is prepared to assume a transformative role. Based on the growing market opportunity and its unique approach to small business lending, the company is on track to undergo significant growth in 2017.
“We were founded to deliver a sustainable business lending model,” says Souri. “From day one, LQD understood that in the world of small business lending, finding customers is easy, but making quality loans is hard. This is why we took the time to develop an underwriting risk model that has the legs to stand the test of time.”
About LQD Business Finance
LQD Business Finance is a Chicago-based tech enabled business lender, founded in 2014 on the notion there was a gap in the micro-middle market. LQD Business Finance delivers structured, flexible and transparent financing solutions to lenders up to $10M in 30 days or less. Working with a diverse network of industries from manufacturing and distribution to wholesale trade, technical services and retailers, LQD Business Finance creates custom-tailored financing solutions specific to each customer’s needs to obtain their business objectives and goals.
Media Contact
Alexandra Runjo
Senior Marketing Associate, LQD Business Finance
Phone: (312) 444-0625
E-mail:alexandrarunjo@lqdfinance.com