IOU Introduces the “Cash Back” Concept to the Small Business Loan Market
Immediately following news of a management shakeup, small business lending company IOU Financial introduced a first-of-its kind offering to eligible customers, cash back.
“Available only to qualified new clients,” as the announcement says, the IOU Cash Back Loan enables borrowers to benefit from perfect payment history by receiving 3% of the original loan back in the form of a cash rebate.
According to Carl Brabander, the new EVP of Strategy, this is not a gimmick where the rebate can only be applied to a future loan or loaded up onto a gift card.
“The merchant would receive the cash back amount by ACH directly to their bank account,” he writes, “provided they (a) have a perfect repayment history and (b) apply for the rebate within 30 days of repaying the loan, using the cash back certificate we would have sent them when the loan closed.”
Translated into dollars, this reward could be sizable given that IOU’s average loan size hovers around $100,000 and can go much higher.
“The IOU Cash Back Loan gives us the opportunity to give something back to new clients that put their faith in us to fund their growth plans,” said IOU CEO Robert Gloer in a public statement.
The cash-back loan concept was developed scientifically through focus group testing, the company claims.
The sudden flurry of activity emanating from IOU can probably be attributed to a deal struck last year when Neuberger Berman, an investment manager with $374B under management, acquired a 15% stake in the firm.
Brabander says that IOU is very bullish on the rest of the year and 2022.
“We see small business coming back strong now that the 2nd round of PPP has finished working its way through the system,” he says. “That’s why we’re investing heavily in products (ex. Cash Back), technology (our IOU360 platform) and distribution right now…”Last modified: August 4, 2021
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.