Online business loan marketplace Funding Circle and accounting service H&R Block have partnered to provide small business loans of up to $500,000 to the latter’s clientele.
This will likely be a topic covered when Funding Circle co-founder and U.S. Managing Director Sam Hodges addresses the audience at Crowdnetic’s Crowdfinance 2015 Conference, which takes place in New York City on Sept. 28.
The H&R Block announcement is partly a case of “if it ain’t broke, don’t fix it.” Funding Circle has realized success from similar partnerships with Intuit, Credit Karma, Tri-Net, Creditera and the National Small Business Association.
But do not assume it is as simple as making a call or two and sending out a press release, Mr. Hodges said.
From Funding Circle’s perspective, Mr. Hodges said there are two common red flags he sees that tell him not to pursue a partnership with a company.
The first is a demonstrated lack of follow through. If the other company does not continually work to develop and nurture the relationship, it is likely to wither.
The second is long-term commitment. Successful partnerships involve extensive sales force education so they can promote the new services to their customers and answer basic questions about the benefit of Funding Circle’s products.
The partner also has to advertise the loan opportunities through its regular channels, actions which become increasingly important as more and more people conduct business online.
That convenience of coming to an H&R Block, where a small business owner will discuss their finances, and obtain valuable information which can grow that business, is a great value add for them, Mr. Hodges explained.
“Funding Circle offers strategic partners across multiple verticals the opportunity to build value-added services by leveraging our core technology, strong underwriting and customer-first approach to deliver unique financing solutions for their small business customers.”
Block Small Business Director Jeremy Smith concurs.
“The missions of our two organizations are very similar. We both provide services to small businesses that enable successful, sustainable growth.”
“Given that we do the accounting for service businesses with less than $20 million in revenue, our clients have found it difficult to get loans from traditional banks. Now our clients have a go-to source for capital to grow their businesses.”
Partner companies also take risks, Mr. Hodges explained.
“When they choose to introduce us to their customers, they are telling them to trust us.”
In the case of H&R Block, a company that works with small businesses to make sure they are sound, it is especially important.
“They will not let anyone abuse their position with their customer,” Mr. Hodges said, when discussing his commitment to his partners.
The borrower also expects a company to refer them to lending products which actually make sense, or both sides look bad, Mr. Hodges added.
Companies planning on staying around for the long-term are wise to consider establishing similar partnerships, Mr. Hodges said, especially before the top companies in each channel are taken.
Every time Mr. Hodges delivers an update on Funding Circle’s progress, their growth rates validate the company’s business model, he said.
“When I talk to borrowers, and hear their revenues are up, their profits are up, and they have hired more employees, it confirms we are delivering a product the market badly needs.”