Able, a non-bank commercial lender, Tuesday announced it has closed on $6 million in venture capital and plans to expand its services nationwide.
Blumberg Capital and RPM Ventures led the round with participation from Peterson Partners and Expansion Ventures AngelList Syndicate.
The Austin-based startup plans to use the money to begin offering loans in 40 states and the District of Columbia. It has 25 employees and expects to hire five more soon. It also plans to use the money to scale its technology and refine operations. The company is also moving to bigger offices within a block of its current downtown headquarters.
Able has created a new kind of “collaborative” loan which requires its borrowers to recruit friends, families and customers to fund 25 percent of their total loan. The company makes loans for as much as $500,000 at rates that average between eight and twelve percent.
Able recently completed a pilot project with a portfolio of 24 local companies. Its customers include soap makers, clothing makers, beer brewers and more. One of its customers, Hops & Grain borrowed $250,000 to expand its operations. It is now applying for a second loan of $350,000 for further expansion. Another customer, Kammok borrowed $500,000 to make hammocks and other camping gear.
“Our loans work really well for people who have that cash conversion cycle,” said Evan Baehr, co-founder of Able.
Able’s loans are like an SBA loan but powered by people, Baehr said. Eight out of ten SBA loans get withdrawn or rejected. Able seeks to fill that gap in lending. Its average time from application to approval is 48 hours.
“We can have companies funded within a week of their approval,” said Will Davis, co-founder of Able.
Able plans to make $100 million in loans to 750 companies nationwide within the next 18 months, Baehr said.
“One thing we’re really excited about is we’ve had zero defaults and zero late payments,” Davis said.
The startup has also launched an “Ask Able” program. It found one of the biggest needs for small businesses after capital was access to non-financial resources.
“What we learned is most people running small businesses at 1 a.m. they’re sweeping the floor,” Davis said. “They don’t know people that have quick information.”
So on the first Friday of every month, the entire team at Able takes pre-scheduled 30 minute phone calls with small business owners. They provide them with help on design, branding, sales and marketing, legal and accounting issues.
“That’s our way of saying to the broad universe of small business owners that we’re there for you,” Davis said.
Able competes with other so-called fin-tech startups including Funding Circle, Lending Club, Prosper and OnDeck. It distinguishes itself by offering dramatically lower interest rates on its loans and great customer service, Davis said.
“Many online lenders offer the equivalent of a payday loan for your business,” Davis said. “We’re building something different. When we fund a business they are ecstatic to get our loan.”
Silicon Hills News did this profile of the company late last year.