Intuit QuickBooks Financing: Speed, Ease and Low Fees for Small Business Loans

Small businesses are very diverse, and so are their needs and sources for financing. For small businesses, borrowing money, or debt financing, is one of the most common sources for funding. While small businesses can seek out loans from many sources, including friends and family, banks, savings and loans, credit unions, commercial finance firms, and the government, the borrowing process can be frustrating, difficult and time consuming for many small business owners.

So I was excited to talk with Rania Succar, Director and Group Leader for QuickBooks Financing at Intuit, about financing considerations and options that are available for small businesses today. Rania recently joined Intuit from YouTube, motivated in large part to her desire to help fuel the economy by helping small businesses succeed in area that is ripe for innovation.

In this video, we discuss trends in small business financing, and what Intuit doing to give small businesses more options and easier access to financing. Rania noted that on average, small businesses spend 33 hours to pulling together all the documentation they need for bank loans, but are declined by banks 70% of the time.

Three years ago, Intuit decided to address this problem with QuickBooks Financing, focused on delivering “speed, ease and low fees,” according to Succar. Intuit’s financing service automatically compiles loan documentation by pulling in data from the small business’ draws QuickBooks account–dramatically slashing time from the loan application process. Then, Intuit matches the small business with one or more of the dozen lenders, including Fundbox, OnDeck and Kiva, on its platform. Loan decisions get processed quickly, and small businesses can compare the different offers they get and select the one that’s best for them.

If you need access to working capital to smooth out cash flow for a seasonal business, or to expand your business, watch this video to learn how QuickBooks Financing can help.

This post is sponsored by Intuit.

Agile Self-Ownership: Network Redux’s Growth Story

baroquon_Add_MoneyMany people associate startups with venture capital funding. But, according to a recent Kauffman study, venture capital is the exception, with only 1% of new businesses getting funded by VCs. In addition, many entrepreneurs don’t want to relinquish control and decision-making to investors.

While some entrepreneurs can bootstrap their businesses with their own funds or via bank loans, many startups–especially in the tech industry–need to find alternative ways to fund infrastructure required to build and grow their businesses.

Recently, I had the opportunity to talk to Thomas Brenneke, founder and President of Network Redux about the innovative approach he’s taken to create and grow an “agile self-ownership business” in partnership with Dell.

Network Redux’s Innovator’s Dilemma

nr_logo_300dpiNetwork Redux was founded in 2004. Initially, the Portland, Oregon-based company provided inexpensive, shared web-hosting services for very small businesses. Demand for services was strong, and the business grew. But the market for low-cost services was quickly commoditizing, and according to Brenneke, “becoming a race to the bottom.”

However, as some of Network Redux’s clients grew, they began asking for dedicated hosting services. This offered Brenneke the opportunity to develop new, more profitable business. But it also posed the challenge of funding the much larger capital outlays required to build a dedicated hosting environment for each new client.

Complicating matters further, the timing couldn’t have been worse. It was 2008, and even though Network Redux was profitable and had deals on the table, most banks just weren’t lending to small businesses.

Finally, Brenneke didn’t want to cede control and decision-making to external investors. As he puts it, “We built the business on an outsourcing model from the outset. We didn’t hire a lot of people, we outsourced when possible to avoid debt and interference from investors. I wanted to continue to grow the business, and maintain an “agile self-ownership” model. ” But, Brenneke adds, “I threw my hands up in the air. To execute on these high value contracts, I needed to invest in infrastructure, but I didn’t have a way to fund the investment.

Financing Agile Self-Ownership

Network Redux had been a Dell customer since day one, standardizing on Dell servers and storage. Over the years, Brenneke had formed a strong relationship with his Dell account team. “I looked at Dell more as a partner than a vendor. When I started the company in my twenties, my business experience was limited. I learned so much from Dell about everything I needed to provide strong shared hosting and private cloud services,” notes Brenneke. “I could just pick up the phone and ask, “How do I do this?”, and Dell would teach me. There’s no question that our relationship with Dell helps us provide better service to our customers.”

Brenneke was confident that Dell’s products would continue to provide the cost, reliability, performance and support he would need for competitive, high availability dedicated hosting business. Now, Brenneke decided to share his financing dilemma with Dell. “I explained to my account rep what I needed and why. He connected me to Dell Financial Services (DFS). I had a long conversation with the Dell credit rep, and they looked over my financial statements and business model. For the first time, I had a lender explain to me what they were really looking for when they evaluate loans, and the best way to structure them.”

After due diligence, Dell approved Network Redux for its first, 36-month term loan, tailored to coincide with the lifetime of Network Redux’s client contracts. Four years later, Network Redux has borrowed over $1 million dollars from DFS. “We get the money we need for infrastructure to bring on new clients. As we grow and pay down our loans, Dell raises our loan ceiling, and we keep growing,” explains Brenneke.

Membership Has Its Benefits

dell founders clubIn 2012, the partnership got even deeper. Network Redux’s Dell account manager thought the company would be a good for Dell’s Founder’s Club, a hand-picked group of innovative entrepreneurs. Unlike Network Redux, most Founders Club members are funded by a venture capital or angel firm. However, all Founder’s Club members view technology as critical to future growth, and have significant technology needs. In addition, according to Brenneke, “Founder’s Club members want to be owners, not exiters.”

Members can take advantage of many benefits, such as concierge-level support, expedited shipping, the opportunity to network with other fast-growing startups, and the Dell Innovator’s Credit Fund, a $100M credit financing program. The idea of the fund is to give entrepreneurs access to technology to help fuel growth, while helping them to preserve equity capital for other business needs. Just as important to Brenneke, “We are treated like a global player. We have access to the best and brightest technical and business resources at Dell for advice and guidance.”

The result? This close vendor partnership has helped Network Redux to increase revenues 100 percent year-over-year. As Brenneke puts it, “This is mutually beneficial–Dell wants us to be a healthy business.”

Perspective

There are many ways to fund a startup and one size does not fit all. However, some startups may not even be aware of external funding options beyond traditional venture capital firms and banks. Furthermore, as this case illustrates, non-traditional financing sources may be a better fit for some businesses.

Network Redux’s technology and financing partnership with Dell illustrates that a synergistic financing partner can provide a startup with more than money. The right partner can also provide services and guidance to help young companies better capitalize on market opportunities.

IBM Global Financing Antes Up Another $4 Billion to Fuel SMB and Business Partner Growth

IBM Global Financing (IGF) recently announced that it would make an additional $4 billion available to help SMBs finance technology purchases through IBM’s partner channel. While this sounds like a very large amount of money (and it is), consider that in less than one year, 7,000 SMBs took advantage of the $1 billion in financing that IGF offered up in late 2011 . In fact, IBM had underestimated pent-up demand—IBM had expected the $1 billion to last 18 months.

IGF is quadrupling its initial commitment to help SMBs finance new cloud, analytics, mobile and infrastructure technologies to help grow their businesses. The program also makes it easier for IBM business partners—including managed service providers (MSPs), who are often SMBs themselves–finance the infrastructure investment they need to build the hosting environments they need to serve customers.

Some of the details include:

  • Deal minimums start at $5,000 U.S., and the maximum tops out at $500,000, with a 0% payment plan for 12 months, making the program relevant for both small and medium businesses.
  • Typical financing contracts last 3 years, but no specific time frame is mandated.
  • IBM business partners sell the financing. These business partners can size the solution and financing required to individual customer requirements, and execute the contract via IBM’s Rapid Online Financing widget, which is designed for non-financing experts.
  • Credit-qualified SMBs can get an approval in just a few minutes.
  • Financing options range from simple loans to tailored leases to total solutions including hardware, software and services (both IBM and non-IBM) in one contract with one predictable monthly payment.
  • IBM is rolling out the program on a worldwide basis.

In addition, IBM has created a new mobile app to further streamline the process. Business partners can quickly provide their clients with price proposals and generate credit approvals using an iPad, iPhone or Android mobile device.

Access to Capital–the Fuel for Progressive SMBs

As discussed in The Technology—Performance Connection for Midmarket Businesses, technology has become a critical lynchpin for business success. Businesses of all sizes increasingly view technology as an essential to improving customer engagement, raising employee productivity, and creating innovation and differentiation—all necessary to building economic value.

SMB Group research reveals a distinct correlation between SMB investments in technology and their business performance. “Progressive SMBs,” who invest more in technology much more likely to anticipate revenue gains than peers whose tech investments are flat or declining. For instance, our recently completed 2012 SMB Routes to Market Study shows that while 85% of SMBs that plan to invest more in technology anticipate revenue increases in 2013, only 42% of those planning to decrease IT spending expect revenues to rise, and 38% that planning for flat IT investments are anticipating growth.

Figure 1: IT Spending Current and Planned

SMB Progressive growth

Source: 2012 and 2011 Small and Medium Business Routes to Market Study, SMB Group

Meanwhile, as more SMBs come to view technology as key enabler to create market advantage, level the playing field against bigger companies, and adapt to new business and market requirements, the percentage of SMBs that are planning to increase IT spending is growing, as shown in trending analysis of 2011 and 2012 SMB Routes to Market Studies (Figure 1).

However, access to capital remains tight, and many SMBs find it challenging to get the capital required for the technology investments they need to grow their businesses.A July 2012 survey by the National Small Business Association (NSBA) found that 43 percent that needed funds for their businesses over the past four years were unable to find a lender. As important, 53 percent said they’d been unable to grow their business or expand operations due to a lack of capital—and almost one-third had to lay off workers.

A Virtuous Cycle for IBM, SMBs and MSPs

IBM isn’t a charity or governmental agency. As a for-profit organization, one of IBM’s key goals for the program is to fuel sales of IBM products, including PureSystems, which offers a new, integrated platform to tune hardware and software resources for data intensive workloads, and gain more flexibility to configure applications for either an on-premise or hosted environments, and a multitude of infrastructure, cloud, mobile and business intelligence solutions. If past success is an indicator of future performance, IBM will certainly achieve this goal with its new round of financing.

Furthermore, this fresh pool of financing should helps MSPs to build scalable infrastructure and hosting environments, and provide more innovative and differentiated offerings to SMB customers. As I discussed in MSP Cloud Challenges in the Midmarket–and How IBM Helps Meet Them, top MSP challenges are to: procure and deploy the resources they need to scale and grow; stay ahead of the technology curve, and to provide the end-to-end services their customers want.  Since IBM financing will cover both IBM and non-IBM content in one contract, it will make it easier for MSPs to build out a more comprehensive, end-to-end infrastructure.

The result? IBM can attract new MSP and other partners, and get them outfitted with the solutions they need more quickly. The net-net is that MSPs and other IBM business partners will be able to speed up and scale their ability provide new solutions that SMBs need for business growth and agility, and help SMBs finance this investment.

Finally, IBM isn’t just throwing money (albeit a large amount) at the situation. The new round of financing is additive to several new global initiatives for MSPs, which IBM launched in September. IBM has put together an integrated program that provides the money, expertise and solutions that both MSPs and their Progressive SMB customers require.

This is the fifth and final post in a five-part blog series by SMB Group that examines the evolution of midmarket business technology solutions and IBM’s Managed Service Provider Channel programs.

The Bank of IBM: Open for Small and Medium Businesses

SMBs comprise nearly 65 percent of global GDP, account for more than 90 percent of all businesses, and employ over 90 percent of the world’s workforce. As such, SMB growth is crucial to the global economic recovery. But, as anyone that’s every run a small business knows, lack of financing often gets in the way of business growth. In fact, the U.S. Small Business Administration (SBA) indicates that more than 50 percent of small businesses fail within their first five years because they lack capital. And we’ve all heard how tough it is for SMBs to get a business loan from the likes of Bank of America, JP Morgan Chase and Citibank.

But in September, IBM Global Financing launched a $1 billion initiative to provide financing for SMBs who need new IT solutions to help grow their businesses. At IBM’s Mid-market Influencer Summit, held last week in New York, I had a chance to talk to Tom Higgins, Director, WW General Business & Channels Sales for IBM Global Financing, and Ed Abrams, VP of IBM Global Midmarket, to learn more about it.

Big Blue’s Big Green Program

IBM Global Financing isn’t new. The organization is the world’s largest IT financier with over 125,000 clients in more than 50 countries. What is new is that IBM has made $1 billion in financing available specifically to help credit-qualified SMBs acquire new technology solutions.  The program stems from conversations with channel partners, who told IBM that their customers often wanted to invest in new solutions to help make their businesses more productive and profitable, but lacked access to financing for these solutions.

With this initiative, IBM hopes to help SMBs get the technology that they need to streamline their businesses and drive growth.  Some of the key features that make this program attractive include:

  • Minimums start at $5,000 U.S. with a 0% payment plan for 12 months–making the program relevant even for small businesses.
  • IBM business partners sell the financing. These business partners can size the solution and financing required to individual customer requirements, and execute the contract via IBM’s Rapid Online Financing widget.
  • Credit-qualified SMBs can often get an approval in less than 60 seconds.
  • Financing options range from simple loans to tailored leases to total solutions including hardware, software and services (both IBM and non-IBM) in one contract with one predictable monthly payment.
  • IBM is rolling out the program on a worldwide basis.

This financing initiative goes hand-in-hand with IBM’s 34 “cost-buster” solutions (which IBM originally announced in June) and are designed and pre-configured to help solve SMB business problems. Cost-buster solutions focus on helping SMBs to:

  • Gain better insights from data
  • Create innovative products and services
  • Connect and collaborate
  • Squeeze costs from IT infrastructure management
  • Integrate and manage different functional areas and solutions
  • Manage risk, security and compliance

Fuel for the Engines of a Smarter Planet

Many SMBs have these and/or related challenges, resulting in a gap between in where their business is today and where it needs to be. In our 2011 SMB Group 2011 Routes to Market Study, SMBs indicated that their top business challenges include attracting new customers, growing revenue and maintaining profitability. Meanwhile,  top technology challenges are containing IT costs, implementing new solutions or upgrades and keeping their systems up and running (Figure 1).

Figure 1: (click to enlarge)

Source: SMB Group 2011 SMB Routes to Market Study

As important, SMB Group studies–along with those we see from other research and analyst firms–tell us time and time again that SMBs that invest more in technology are dramatically more likely to achieve and expect higher revenue growth than counterparts that are more conservative in this area. For instance, as shown in Figure 2, 81% companies investing more in technology expect revenues to rise in the next 12 months, while only 34% of companies that are decreasing IT spending expect revenues to rise.

Figure 2: (click to enlarge)

Source: SMB Group 2011 SMB Routes to Market Study

Anyone that listens to NPR has heard IBM’s “Midsize Businesses are the Engines of a Smarter Planet” slogan. Technology–applied in alignment to business objectives–increasingly provides the fuel to achieve and sustain business success. In a time where financing alternatives are scarce, IBM’s financing programs provide a new way for SMBs to get the capital they need to move the business forward.