Business Lending

Another Small Business Loan Marketplace is Getting a Massive Venue

What’s the difference between a typical bank having naming rights to a sporting arena and a fintech lender? The fintech lender will attempt to serve as a one-stop-shop for everything. And that’s important because this October the Intuit Dome will open its doors in Inglewood, California and become the hometown arena for the LA Clippers. Intuit has a lot of brands. According to the NBA, Intuit subsidiaries TurboTax, QuickBooks, Credit Karma, and Mailchimp will all feature prominently in the venue experience. That draws attention to QuickBooks Capital, the company’s small business lending division which is presently generating more than $1 billion a year in loans. Intuit’s got a fallback option for businesses that might not be suitable for them directly, an automated marketplace that connects business owners with other lenders. It’s been so successful that Intuit states they’ve originated more than $2 billion in loans through it.

This seamless integration of referrals to other lenders is what makes the marketing campaign via arena naming rights so potent. And they won’t be the first ones to do it. SoFi, for example, whose football stadium is in walking distance to the Intuit Dome, just announced its own small business loan marketplace. SoFi Stadium was home to the Super Bowl in 2022 and will be again in 2027. It will also be home to the Olympics in 2028. Not a bad way to get one’s name out there.

Intuit’s SMB Loans Relatively Flat Year-over-Year

Intuit originated $279M worth of term loans to small business for the fiscal quarter ending October 31. This is down from the $314M originated over the same time period last year.

“As of October 31, 2023 and July 31, 2023, the allowances for loan losses on term loans to small businesses were not material,” the company wrote in its earnings report.

Further, Intuit said that “In August 2023, we entered into a forward flow arrangement with an institutional investor. Pursuant to this arrangement, we have a commitment to sell to the institutional investor a minimum of $250 million in participation interests in unsecured term loans purchased or made to small businesses over the next 18 months, subject to certain eligibility criteria.”

Intuit did not raise its term loan program on its earnings call nor did analysts ask about it.

Here’s how Intuit’s flat SMB loan originations stacks up against some of its direct competitors:

Square Loans – Steady

PayPal – Significant pullback

Shopify Capital – Significant increase

Nice Asset, Sure Would Love to Lend Against It

“Sean,” said the moderator, “where do you see domain names in five years?”

At the inaugural Domainer Expo in Las Vegas this week, I was sort of a self-proclaimed emissary from the lending world, there to tell everyone that domain names had a lot more potential utility than what most people probably realize.

“When businesses are looking for capital, there’s sort of a diagnostic checklist,” I said (in substance). “You ask the business how much revenue they have, you ask them if they have equipment, you ask them if they have real estate, etc. and lenders are trying to figure out which of those assets is something they can use as the basis for financing, but nobody asks about their domain name.”

Maybe they should. If a million links on the internet point to a business’s domain name and search engines rank it, then that domain name is integral to the sales generated on the site. And if a business got a loan against a domain name that they’re using to generate tens of thousands or hundreds of thousands in sales per month, they probably wouldn’t want to lose it because it’s worth a lot.

Usually in the business loan world the story ends here. Ok, domain names? sounds complicated, too techie, waste of time, dollar amounts are too small, nobody wants to deal with that, etc.

But you’d actually be surprised. The technology is just about there that if a business doing $1 million/year in website-originated sales said that they’d be willing to put up their domain name as collateral for a $100,000 loan today, you could send them a link that automatically transfers their domain name to escrow in seconds without them experiencing any disruption to their site. Then if they default on the loan, the domain name transfers to you, where if you understand anything about e-commerce, you should immediately be able to monetize their domain and capture those sales for yourself.

That means no trying to foreclose on a property, no trying to chase down equipment, no suing them, getting a judgment and then hiring an expert to find if they have assets anywhere. Just click-click yours, a revenue generating asset that you can use as leverage to cure the default or monetize immediately and start making your money back with. If you don’t know anything about websites, then maybe this concept wouldn’t be enticing for you as a lender.

I could go into the technical mechanics of how this domain loan process would work, but for now just imagine talking to a business owner generating a lot of revenue that really doesn’t have many assets to make use of. They need $100k and they can’t get it any other way. You tell them they can use their domain name as collateral with no disruption to their website. It will happen instantly. There’s no tax returns needed, no credit check. It’s based on sales, something we might all already be familiar with. Will some business owners say “yes” to such a proposal or would they tell you they’d rather have nothing instead?