The cash advance industry is growing fast! In fact, according to Dailyfunder.com in 2013 alone $3B was made in cash advances and I have seen reports that the industry is growing 25% year over year.
If you ponder on it for a moment it makes sense! The economy is doing well, merchants are confident that short term loans (even at relatively high interest rates) are worth the risk and the additional capital will service their business needs well.
Moreover, banks today are still of the mentality of the great recession and have closed their doors to traditional lending making the case for merchant cash advance lending even greater.
Yet there is another even faster growing market for lending, the world of P2P lending with household names like "Prosper" or "Lending Club" which are attracting investors looking for solid returns on their capital sitting idly at the bank!
Yet lending money to someone we don't know seems counter-intuitive to most of our financial educational upbringing. P2P lending means I am going to lend money to God knows who? How do I know I'm going to get my money back? I don't have time to chase people in order to get my money back, is this worth the risk? Often these are solid questions and I believe that they stop most people from plunging into the lucrative "lending" industry.
Like all investments there are risks, however, the smart investor limits their risk (as much as possible). There are risk tools available in the market, credit ratings etc..but allow me to focus on one tool "Account Verification".
What Is Account Verification?
Account Verification is probably one of the best "tools" out there in the market to validate and vet a prospective borrower, prior to funding a loan. Account Verification is the process of requesting a borrower's login credentials to their online bank and verifying (yourself) via the bank that the borrower has cash flow and is in good standing. In short, you are securely accessing the borrower's financial institution and looking up history, cash flow and verifying that the borrower is a real person with a real bank account with real cash flow. This is not new!
Consider this - Has a mortgage lender ever financed a loan without asking the prospective borrower for 3+ months of monthly statements? Account Verification technology takes this a step further. Let me describe the benefits as we see it via our technology at LoanConnect (www.3rdvista.com/loan-connect)
Value Add of LoanConnect:
LoanConnect is an account verification software that is; affordable, secure, extremely efficient and most importantly provides higher level monitoring lessening the prospect of a defaulted loan.
Here are the key benefits:
* Access Actual PDF Statements:
Via the LoanConnect product from 3RDVISTA a lender can view the actual PDF Bank statement as it exists on the Bank's web site. We have heard horror stories of tens of thousands of dollars lost on a single loan because the PDF Bank statements were photo-shopped and assumes that the statements are legitimate.
The possibility of a "doctored" Financial statement is impossible via LoanConnect, since the technology logs into the bank's web site and extracts the PDF automatically. In other words, no hands touches the pristine bank statements. Via the statements you can verify and match the borrower's Account Name, Account Address, Account Number, transactional data and more.
* Check Images:
An additional value add to LoanConnect is that this technology pulls in check images as well. Imagine doing your due diligence and viewing a check transaction for $10,000. As a lender I would be nervous. Is this $10k in revenue, is it check from Grandma or even a check from another lender (in which the merchant is using your loan to pay off another loan!)? LoanConnect as part of our account verification process allows you view the check image payee so that no suspicious transaction is ever left unanswered.
* Extremely Efficient:
LoanConnect by design was made to be as efficient as possible. No one likes chasing borrowers for their financial statements and in reality, the borrower should have a very easy way to submit their information quickly and part of the loan application. LoanConnect offers two methods for a borrower to submit their online bank credentials. The first method is via a white labeled LoanConnect plugin that is installed on the lender's web site. How does it work?
Borrower logs to the lender's web site, clicks on the Bank Account Verification button, selects their bank and inserts the online credentials. In addition, LoanConnect can host a secure white labeled account verification webpage which can be sent out as a link to prospective borrowers view email. This hassle free method puts the onus on the borrower to submit their financials while allowing the lender to use their time more wisely.
* Daily Monitoring:
Perhaps one of the key features that I like about LoanConnect is allowing a lender to constantly view and monitor loans. Most lenders have a set of ratios as part of the lending arrangement. For example, Cash Flow cannot drop below X% or X number of NSF results in an immediate pull back on the remaining loan balance. But as lender do you have time to monitor every loan?
LoanConnect allows for daily data pulls (at $0.17 per data pull!) allowing you to set monitors and alerts if thresholds are broken. For example, create a daily monitoring alert if the merchant has a NSF on their daily account balance. A big cash payment went out, set an alert to trigger a notification to you. As a lender you can rest assured that the technology is watching hundreds of accounts daily and will surface borrowers that may trigger suspicious activity. Simply put, the advantage is, the more proactive you are the greater chance you reduce defaulted loans.
Lending money in the "global economy" is the new investment frontier and those whom embrace technologies that significantly reduce risks will do financially well.
For more information about LoanConnect, please check out LoanConnect from 3RDVISTA at www.3rdvista.com/loan-connect
Article authored by Maurice Berdugo (email@example.com)
Video Demo of LoanConnect Admin Panel