As our series with the co-founder of Spotcap Lachlan Heussler continues, Lachlan explains more about what Spotcap does and how this startup is helping small businesses through efficient loans and flexible repayments. From Spain to New Zealand, to Australia and the UK, Spotcap spreads across borders and currencies.

What is Spotcap’s underlying proposition?

Spotcap’s mission is to empower SMEs by providing tailored finance so they can focus on the most important thing, which is their own business. Spotcap provides unsecured lines of credit to small businesses — up to $250,000 for a 12 month period.

Traditionally, when small business owners need a loan to purchase working capital, banks often secure the loan against their personal homes. A risky move for a small business owner. In addition, the application process to secure a loan is often timely and cumbersome.

“They [small businesses] might have to go and meet a branch manager or banker. They’ve got to prepare cash flow forecasts. They have got to get stuff from their accountant. This takes ages” explains Lachlan.

However, small business owners have access to a huge amount of financial data at their fingertips, which they might not even know about. Spotcapimbeds that in their application process, so that it can be completed 100% online, and it only takes five minutes.

How does the application process work?

The application process is designed to be simple, easy, and fast.

For loans under $30,000 all the small business owner has to do is:

  1. Fill in basic information about the business.
  2. Answer four questions about the operations of business.
  3. Connect their business bank account.

For loans over $30,000, the small business is asked to provide financial documents to supplement the three step application.

What happens when the bank account is connected?

Spotcap utilizes a machine that goes in and downloads all of the bank account transaction data into Spotcap’s database. According to Lachlan, this has two advantages. First, it is the easiest, fastest, and most secure way to get data into Spotcap’s systems. Second, once a client connects a bank account, the system checks to make sure the name of the entity applying corresponds to the name of the bank account.

“So for us it’s a very very strong anti-fraud measure in the sense that someone’s just not just saying here is an account number, please send the money here. We actually know where the money is going” Lachlan explains.

In addition, the portal that Spotcap has built provides a snapshot into the entity’s transaction history. They do not have access to any bank accounts like a personal finance manager would, for example. Spotcap’s sophisticated credit modeling engines forecasts the clients’ ability to repay over time.

“And then to take that a step further, those risk models also tell us: number one, do we want to lend to the customer, yes or no? Two, how much do we want to lend to this customer? Three, at what price?” explains Lachlan.

Lachlan explains what makes Spotcap unique.

Spotcap provides a tailored financing solution.

Lachlan explains how important it is to risk price every customer who wants to apply for credit. Traditionally, financial products are one size fits all. However, Spotcap does not operate the same way as a traditional bank might.

“Essentially, every single client that applies for credit from Spotcap gets a tailored price” Lachlan says.

Spotcap is all about flexibility.

“There might have been a short hiccup in their business and that’s fine. We can restructure the loan to try and help them through that period, and we are more than happy to do that” explains Lachlan.

Spotcap provides real time feedback.

Spotcap takes advantage of brilliant new technologies such as optical character recognition (OCR) to read and decipher documents.

“It [OCR] basically reads the documents automatically. It classifies them. It gives the clients, as they are applying, real time feedback as to what the document is that they have uploaded and what they still have to give us” says Lachlan.

“We are trying to empower the SME to give them instant feedback as they are completing the application to let them know that the app is 75%, 80%, 90% complete.”

Stay tuned to hear more about Spotcap from Lachlan and Spotcap’s recent investment from Heartland Bank in New Zealand…