By Diane Mastrull
The Philadelphia Inquirer.
Next time you stop by a Joe Coffee shop for a cup of joe, or United by Blue to buy clothing or accessories, know that you are in the midst of a financing revolution known as alternative lending.
Both start-ups have grown because of it. So, too, have talks in Washington on whether it requires more regulatory scrutiny.
Alternative lending is partly inspired by the raise-it-quick popularity of crowdfunding to help entrepreneurs get ideas to market.
The lenders, funded by private investors, aim to serve the nation’s 28 million small businesses with loans of $50,000 to $500,000 — sizes banks consider too time-consuming and costly to offer.
“We are all filling the gap where banks aren’t lending today and ultimately pushing to create better customer experiences,” said David Haber, a 27-year-old Harvard University graduate and cofounder of New York-based Bond Street, which made loans to Joe Coffee and United by Blue.
He and another Harvard alum, Peyton Sherwood, quit jobs in marketplace and financial services investments (Haber) and mobile-payments development (Sherwood) at the end of 2013, having recognized a need in small-business lending.
By “better customer experiences,” Haber means speedy approvals on loan requests, in as little as 48 hours, enabled by electronic business and banking records.