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Lendio CEO Brock Blake on Franchisee Loan Options During the Coronavirus Crisis

The small-business-lending expert says we are in “uncharted territory.”

Along with co-founder Trent Miskin, Lendio CEO Brock Blake started the nation’s largest small-business loan marketplace nearly a decade ago, when the young entrepreneurs were fresh out of college. Blake and Miskin carved out a niche for Lendio by providing small-dollar loans for small business owners who don’t always qualify for loans at traditional banks. Today, the company they founded offers loan options from a variety of online lenders, banks and industry-specialty lenders and has lent more than $2 billion in capital to small businesses.

We spoke to Blake to learn how franchisees should be thinking about their loan options during the ongoing COVID-19 outbreak that has sent the franchising world into a tailspin.

1851 Franchise: What makes this crisis different or more dangerous than previous economic downturns?

Brock Blake: From a lending perspective, it’s unchartered territory. Fintech lenders were born out of the last financial crisis in this country. There’s no solid data on whether non-traditional lenders’ unit economics can hold up when their credit boxes and underwriting have never experienced recession-like conditions before. 

While Lendio isn’t immune to the effects of a downturn — no one can make that kind of guarantee in such a fast-moving economy — we are remaining extremely positive. Our marketplace model does have more flexibility to deal with adversity. And with multiple lenders on our platform, we’re able to maneuver better to help as many small businesses as possible to weather this crisis.

1851: Are there lessons from the 2008 financial crisis that small businesses can learn from today?

Blake: I think every small business owner must be truthful about the business’s vulnerabilities. Those that were unable to ride out the previous financial crisis will attest to this. As part of this, small businesses shouldn’t be afraid to ask for help when they’re in crisis mode. We hear a lot of talk about bailouts for big businesses, but there are a lot of organizations looking to help small business owners through this difficult time. There are community relief funds in some areas and local grant options are also popping up. You can stay up to date on these opportunities by setting a Google alert for terms like “coronavirus and grants” so the latest information can be delivered to your inbox.

1851: How is Lendio working with its clients to weather this crisis?

Blake: Lenders are changing their credit boxes nearly every hour based on the current environment. Many are not lending in certain states or industries. Lendio is navigating through these ever-changing credit requirements so that small business borrowers don’t have to go at it alone. We are doing the hard work on the back end so that borrowers, who already have too much on their plates, can have a trusted advisor guiding them to the exact lender that will give them a loan at this time.

1851: Are there loan options that might be particularly helpful for franchisees at this time?

Blake: I always recommend having a line of credit or credit cards available to access capital. Even if you don’t feel like you need capital right away, consider getting a loan as a financial safety net. Whether you apply with a traditional bank or an online lender, make sure all your financials — including bank statements, business plan and taxes — are in order before you seek out a loan.

I would also add that right now, what we really need to see is the Small Business Administration expanding guarantees of capital through non-bank lenders, not just community banks. Non-bank lenders and online marketplaces already see thousands of inquiries every day from small businesses in need of capital, and that number is skyrocketing under the current circumstances. Enabling these lenders to continue lending to these businesses would be the most efficient use of stimulus funds at this time.

1851: Are there loan options that you would caution franchisees to avoid right now?

Blake: I’ve always advised small business owners to be strategic about debt. Running a simple ROI analysis will help you ensure your projected cash flow can handle the payments of a loan. If you’ve been preparing cash flow projections each year, you’re better able to understand your financial needs, especially in a crisis situation.

1851: What other steps can franchisees take to survive this crisis?

Blake: If your doors are still open now, look at what kind of financial safety net, if any, you have in place. Consider a loan or line of credit if you haven’t already. If you’re already past that point, can you lean on your community for help? Are there grants available to you? Additionally, tap into alternative revenue streams, perhaps sub-leasing a portion of your retail space if you have one. Implementing cost-saving measures sooner rather than later is also critical. Trim some of the fat in platforms you’re not using, maybe reevaluate a supplier or distributor, or cut down on supplies.

1851: Are there ways that consumers can help support their local franchisees?

Blake: It’s important for those of us who have disposable income right now to spend it supporting local small businesses. If a local restaurant is still offering takeout or delivery, place an order and tip generously. If an event center or other affected business near you has gift card options, take advantage of those. This will help in the short-term by getting capital into their hands today. Lendio and [small-business-funding company] 

Kabbage have partnered to create a website dedicated to supporting local entrepreneurs through gift certificate purchases that anyone can take advantage of.