American Express Co. has plans of moving in and of shaking up the field in a territory occupied with startups like Square Inc. and On Deck Capital Inc. AmEx’s debut of online loan platform, Working Capital Terms, will make it possible to approve loans in minutes for existing small business cardholders. These businesses can then turn around and use the money to pay vendors.
The range of these loans are from $1,000 to $750,000, with fees of 0.5 percent for a 30-day loan to 1.5 percent for a 90-day loan. In addition, AmEx will have the capability of depositing funds directly into vendors’ accounts in as little as two days. This is great news for startups and small business owners, since securing funds can be a big obstacle.
In a telephone interview, Susan Sobbott, AmEx’s president of global commercial payments, shared, “We’ve combined the convenience of the online lender with the competitive pricing of a bank loan. It’s a big opportunity for us to go into an area where businesses want to pay vendors that don’t accept any credit cards.”
AmEx is not the only one hoping to offer a faster cheaper option to customers and entrepreneurs. Other big financial firms are also developing their own online lending channels. For now, AmEx is counting on its longstanding ties to both small and mid-sized U.S. businesses. AmEx’s hope is that these ties will give them an edge over upstarts.
Conquering Industry Turmoil
AmEx is introducing Working Capital Terms in the midst of industry turmoil. Many fintech companies have helplessly watched their stocks dropped in the midst of struggling with competition. They have also run into the problem of dealing with the ever-growing pile of loans they arrange, since they are not drawing enough money from outside investors to fund those loans.
Analyst at Wedbush Securities Inc., Gil Luria, feels that AmEx’s Working Capital Terms is an opportunity that could “eliminate the need for the very expensive, unsustainable products from Square and other online lenders”.
AmEx is not the only big lender pushing for changes. Wells Fargo & Co. shared in May that it was launching a program to offer small businesses quick access to online loans – in as soon as one day. JPMorgan Chase & Co. is also working to offer small businesses better options. This large lender is collaborating with On Deck to provide a speedy way to process loans to the bank’s 4 million small business customers.
All in all, the goal of all of these lenders is to offer small businesses better options. AmEx is confident that their online loan platform will do just that. In the words of Chief Executive Officer Ken Chenault, the firm is combining its skill and assets to offer its customers a “superior” lending model.
If your business is in need of an online business loan, now is definitely the time to take advantage of the many lending options. As you create a list of possible choices, don’t forget to compare the services offered by alternative lenders. To learn more about the business funding options offered by our expert team here at First American Merchant, feel free to contact us today!