P2Binvestor is a crowdfunding platform for commercial business loans secured by receivables. P2Binvestor helps businesses solve issues and bridge the gap between hard-to-get bank financing and high-cost lending sources. Our interview below is with Erin Bassity from P2Binvestor team:
Q: For those who have never heard of it, how would you describe P2Binvestor?
A: In a nutshell, we crowdsource working capital for growing businesses. It’s debt-based crowdfunding. More explicitly, we provide financing to businesses and operate an investment platform that allows accredited investors to participate in funding our clients’ credit lines. Crowdfunding is fundamentally about risk diversification, and by spreading the risk of a loan among a crowd of investors we can help businesses that are currently underserved by traditional lenders and banks. We provide more capital, more flexibility, quick decisions, and a much higher quality of service.
We are a young company, founded in 2012. We spent almost two years building our technology systems and underwriting protocols and officially went to market with our platform and lending products in January of 2014. We signed our first client in May of 2014 and have around 250 investors on the platform.
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Q: How does P2Binvestor’s crowdlending work?
A: We underwrite and provide our clients with a revolving line of credit of up to $5 million that is secured by their receivables or future contractual revenue. On the investor side, our crowd participates in funding our clients’ credit lines in exchange for a fair return and 60-day liquidity on average. Our clients’ credit lines are not wholly dependent on the crowd, however, as is common with some all-or-nothing crowdfunding models. We use technology to make the whole process fast and hassle-free for both businesses and investors.
Our lending model helps companies unlock cash that is on their balance sheet. We advance them funds immediately so they do not have to wait 30-90 days for payments from their customers. This lets them focus on running their business instead of dealing with cash-flow issues, and we take care of collecting on their invoices.
We generally work with U.S.-based companies that have between $1 million and $30 million in annual revenue in most industries including technology, energy, staffing and personnel services, manufacturing, and natural foods. Our customers tend to be progressive, growth-oriented companies for whom traditional financing isn’t available or doesn’t make sense. We offer better rates than most online lenders, and our average loan sizes at the moment range from $250,000 to $2 million.
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Q: How do you process your applications?
A: Our application is completely web-based and simple. When a borrower submits an application on our website, they quickly get a call from our team. We ask them a few clarifying questions and begin to process the application. Every business owner has a unique history and story, and we take the time to listen and understand what makes their business special. We do not apply a one-size-fits-all approach to evaluating loan requests, which means we can often fund companies that have had trouble finding the capital they need from other sources. If we like the deal, we issue a term sheet to the potential client and agree to terms for pricing and structure. We then proceed into underwriting in which we conduct thorough due diligence on each client. If the client satisfactorily passes this process, we approve and fund their credit line. Clients can access the capital they need from us in about 10 business days in an average scenario.
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Q: What can we expect from you in 2015? What are your plans?
A: Growth! 2014 was a great year for us—we proved our model and the strength of our core strategy. In 2015, we are focused on spreading the word and expanding our team to get more companies funded. We are investing heavily in better technology and better administrative processes to make things even easier for our customers. Our goal is to surpass $100 million in invoices funded this year. We are currently at $37 million with a loan portfolio of $12.5 million and 20 clients.