American Express Expands Business Loan OptionsJuly 5, 2016 | By: Sean Murray
American Express is expanding beyond their merchant financing program. The new Working Capital Terms program makes small business owners who are simply Amex cardholders, eligible for funding as well.
There’s a catch however. The funds must be used to pay vendors, according to Bloomberg, a process which Amex controls by paying the vendors on the borrower’s behalf. The program is more a way to enable small businesses to pay vendors using their Amex card in situations where vendors don’t accept Amex, rather than providing businesses with capital to use on a discretionary basis like OnDeck and Square Capital offer.
The Bloomberg story headline, “AmEx Challenges Square, On Deck With Online Loan Marketplace” is pretty misleading. They actually quote Susan Sobbott, AmEx’s president of global commercial payments, as saying “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.”
There does not appear to be any “marketplace.”
In April, AmEx made their merchant financing program available on the Lendio platform. That product, which is different than the new Working Capital Terms program, was called a hybrid between a merchant cash advance and a bank loan, according to Lendio CEO Brock Blake. Merchants with a minimum revenue of $50,000 and two years of operating history can apply for that loan based on cash flow and historical credit card sales activity.Last modified: July 5, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.