Long-standing cash advance company renames itself Bizfi and wants to match small businesses and lenders

Stephen Sheinbaum, Founder of the Cash Advance Company Merchant Cash & Capital (MCC), has a new idea: Bizfi, an online platform to match potential borrowers with online lenders. I was curious to see him before he officially debuted at Finovate, the fintech conference in New York City, on Thursday, so I asked Sheinbaum for a demo ahead of time.

It might be a strange thing for a short term lender like Bizfi (as MCC has rebranded itself) to set up a loan buying site. After all, the organization has funded $ 1.3 billion in expensive short-term capital to more than 25,000 companies since 2005. But as the field grows increasingly crowded, Sheinbaum is betting big on it.

On the plus side: it’s easy to connect data to the BizFi site and get offers from up to 35 backers on the system, including CAN Capital,

On the bridge, Fundraising circle, Blue vine, SmartBiz and

The cabbage. And it is fast. In the demo, chief strategy officer Walt Levengood started a pizza business in Queens, provided financial information and a requested loan amount, and voila received seven offers. As an occasional user of InsureMyTravel, which offers similar comparisons for travel insurance, it sounded a lot like me. And the commissions, Sheinbaum says, are a reasonable 3%, although they are built into the financing costs that consumers see rather than broken down separately. “We present our offering side by side in a really transparent way with that of OnDeck, Funding Circle or CAN, and we give people the option of getting SBA loans or factoring,” Sheinbaum said.

In contrast, Bizfi does not require lenders to show their actual APRs so that borrowers can more easily compare offers to determine what is best. Instead, each offer showed its own amount and terms, leaving the potential borrower to go through them. More problematically, Bizfi’s own cash advance was at the top of the list, claiming that prominent space at the top of the screen, as offers were listed based on how quickly they were received, rather than what which might be best for the borrower. “The best definition is speed, cost of capital, duration,” Sheinbaum explains. “Beauty can be in the eye of the beholder.”

Bizfi is not the first company to set up an online credit brokerage platform. Fundera, which receives funding from Khosla Ventures, First Round Capital and others, has been operational since early 2014. Unlike Bizfi, Fundera is not and has no intention of becoming a lender. This eliminates the potential conflicts of interest of a broker directing clients to their own product, a problem endemic in the financial industry. Founding signatory of the charter of borrowers’ rights, Fundera also offers tools to help borrowers compare rates and is very selective about which lenders it authorizes on its site. “We swept the lenders with a bat,” says Jared Hecht, co-founder and CEO of Fundera.

To its credit, Bizfi does not only have cash advance companies, but high quality lenders, including SBA lenders, on the site. Since its soft launch six months ago, it has made 140 loans. Now, Sheinbaum isn’t just rolling it out directly to small business borrowers, he’s also working on private label technology for businesses that want to offer financing to their clients. This, he says, is the next wave of growth for the online lending industry – and for Bizfi. He said, “It’s just starting to take off.”

About Lolita Plowman

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