By Paul Gores
Milwaukee Journal Sentinel
WWR Article Summary (tl;dr) Bankmybiz.com is a young Milwaukee-based financial technology company that works with banks by handling smaller business loans banks typically avoid.
MILWAUKEE
A couple of years into operating Whisk Culinary, Zak Groh liked what was happening with his business.
Sales were rising and major corporations were being added to the list of firms ordering in-flight fare from Whisk, a caterer that makes meals and snacks for private jet passengers who appreciate fresh food, presentation and eco-friendly packaging.
Groh, a chef and founder of Whisk Culinary, didn’t need a huge loan, only $20,000 in working capital to add staff and expand his kitchen operation outside Milwaukee. However, because the company is in the food industry and the loan amount was small, it wasn’t attractive to banks, which prefer financing less-risky businesses and making larger loans.
“I had been doing my best to put something together with traditional lenders, but being a food business, pretty much no one wants to touch you because you fall into the category of a restaurant,” Groh said.
An accountant suggested he try Bankmybiz.com, a young Milwaukee-based financial technology company that works with banks by handling the smaller business loans banks typically avoid.
Groh applied at the Bankmybiz.com website for a loan and soon was talking with co-founder Michael Adam, a former M&I Bank and Associated Bank lender, who wanted to know more about Whisk Culinary and the private aviation in-flight cuisine business.
“It was an interview in the sense of what you’re doing, where you’re at and a little bit of my background,” Groh said.
Whisk Culinary got a $20,000 loan, and since then, the company has seen annual sales quadruple to about $800,000, Groh said.
Although it was the kind of loan banks eschew, it was right in the wheelhouse of Bankmybiz.com.
Launched at the end of 2013 by Adam, Bankmybiz.com’s goal is to be the No. 1 referral partner that banks turn to when an existing customer or potential new business borrower needs a small loan that doesn’t fit into the bank’s parameters.
“As a banker, I knew it was really hard for small businesses to get loans under $200,000, under $100,000 even more so,” Adam said. “Sometimes that’s all a small business needs. They need a $50,000 loan or $12,000, and banks aren’t really set up to do that. With regulations being the way they are, it costs the banks too much money to do those small loans.”
By working with and making referrals to Bankmybiz.com, a bank can keep an existing small business customer happy, and maintain a company’s deposits and other profitable accounts rather than risk damaging the relationship and losing them by denying a small loan. If a small company grows and eventually needs more services from a financial institution, the bank that helped it out by recommending Bankmybiz would be positioned to obtain that business, Adam said.
Bankmybiz.com actually started as more of a match-making business, trying to connect businesses in need of small loans to lenders that would provide them.
“It was built for bankers to do some lead generation online,” Adam said.
But in fall of 2015, Bankmybiz.com transitioned from matchmaker to small-loan provider when, along with making some technology changes, it partnered with Advantage+, a longtime direct lender that offers equipment and working capital loans of $2,000 to $200,000. Advantage became an equity holder in Bankmybiz as part of the deal.
Bankmybiz.com’s focus is on working with individual banks, unlike online national small business loan providers, Adam said.
“What differentiates Bankmybiz is those companies go after the individual business owner and they are trying to disrupt the banking industry,” Adam said. “What Bankmybiz is doing is we’re kind of disrupting the disrupter. We’re actually a product for the banks.”
Adam said Bankmybiz.com is adding bank partners weekly. One partner is Westbury Bank, a Milwaukee metro area community bank.
“They’re a referral source for us, and generally it’s $100,000 or less, non real estate, for operating companies that are looking for an alternative funding source that they may not find at a traditional bank,” said Kathy Branton, a vice president-business banking for Westbury.
For example, Branton said, few banks are interested in financing restaurants. But Bankmybiz has underwriters who will look into whether it could provide funding for equipment if the bank won’t do it. The underwriters and management team Bankmybiz has teamed up with at Advantage+ “are just top-notch,” Branton said.
Because of the size and potentially higher risk of such loans, Bankmybiz.com will charge a higher interest rate than a traditional bank might for financing. But it’s still considerably lower than the rates for a business credit card and some national lending competitors, Adam said.
“We specialize in business loans from $5,000 to $100,000,” Adam said, noting that $250,000 is the high end for Bankmybiz.com.
As the name implies, potential Bankmybiz.com borrowers apply online. But the firm also recently introduced a mobile app that takes loan applications.
Adam said key executives with him at Bankmybiz.com include Nathan DauSchmidt and Ashton Kirsch.
Adam said Bankmybiz.com is profitable. As a lender, its growth benchmarks are just being established. It had more than $8 million in loan applications in 2016. The average size of approved loans was between $25,000 to $30,000, Adam said.
The goal for 2017 is to add banking partnerships, he said.
