Lendio raises $55 million to surface small business loans using machine learning

Lendio, a company that provides a platform that taps algorithms to match customers with lenders and secure loans, announced that it raised $55 million. CEO Brock Blake says the influx of funds will bolster Lendio’s marketplace while enabling it to introduce new bookkeeping and lender services functions.

Lendio claims to make it easier for small- and medium-sized business owners to secure loans. Using machine learning, it can streamline the whole process, which usually includes comparing lenders and juggling things like credit scores, collateral, and fees

“This … round is a significant milestone in Lendio’s mission to fuel the American dream as a financial matchmaker that brings high-tech, high-touch capital to the small business economy,” added Blake, who cofounded the South Jordon, Utah-based company in 2011 with Levi King and Trent Miskin. “With these funds, we are strongly positioned to grow our existing platform as a trusted loan facilitator that supports both lenders and borrowers, while building out a range of new integrated lending services that get the right loans into the right hands at the right time.”

On Lendio’s website, businesses fill out a fee- and obligation-free application that takes about 15 minutes and doesn’t impact their credit score. Then, they’re able to explore business line of credit, small business loan, short-term loan, business-term loan, merchant cash advance, business credit card, equipment financing, commercial mortgage, accounts receivable financing, startup loan, and business acquisition offers from over 75 partners including American Express, Chase, PayPal, LendingClub, Kabbage, Comcast Business, Staples, and Funding Circle.

The machine learning algorithms underpinning Lendio’s marketplace take into account factors like offer likelihood (i.e., whether the lender will give the applicant an offer), funding likelihood (whether the applicant is likely to accept an offer), and the applicant’s product market. According to Brock, they’re trained on over 140 dimensions about the borrowers and their business and more than 800,000 possible deals, enabling Lendio to find financing for more than 65% of applicants compared with the 20% who successfully obtain bank loans. “This helps capture the ideal balance between the lender’s funding target and what works well for the borrower, and deep integrations with lenders allow for programmatic and instant submissions,” he told VentureBeat via email.

Lendio says it’s funded $1.4 billion in capital across 73,000 loans, which the company asserts makes its marketplace the largest of its kind in the U.S. Over the past  two years, year-over-year growth averaged 75%, and the number of loans facilitated grew to over 100,000 (totaling $2 billion),

Brock says the financing from this latest round will also be used to grow Lendio’s Sunrise product, a money management dashboard that helps customers visualize their cash flow and finances. It supports customized invoices and lets users link both bank accounts and credit cards, and it ships with templates for profit and loss, balance sheet, tax summary, customer statement, and accounts receivable reports. Business owners can invite accountants to access transactions and financial reports, who can add sales tax to invoices based on customers’ locations, and they benefit from backups across multiple data centers over encrypted connections.

Additionally, Lendio plans to enhance its lender services division, which provides banks, credit unions, and online lenders access to a custom, white-labeled online app that lets them accept loan applications online.

About $31 million of Lendio’s latest raise was equity, led by Mercato Partners’ Traverse Fund, while $24 million was a debt facility from Signature Bank. The company has raised over $100 million in venture capital to date, and it employs over 300 people according to LinkedIn data.

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