Portland, Ore.-based Mirador's lending platform uses machine learning and predictive analytics to help some credit unions level the playing field against larger institutions in originating financial assistance to small businesses.
Mirador, which covers a range of commercial loans including term, lines of credit, commercial real estate, SBA s, and collateral backed, said it helps credit unions with acquisition, efficiency and profitably; and small businesses to find willing lenders and better rates.
The Oregon firm held it more than doubles borrowers' chances of successfully obtaining a loan. Its conversion rate is 59% versus the industry standard of 25%. The company has helped partner financial institutions facilitate loans to more than 4,200 customers, with an average loan size of $132,000.
Small businesses seek credit from wherever they can obtain it, including traditional financial institutions, nonbanks, and alternative lenders. Some pay as much 15 percentage points more, to obtain credit quickly and to dodge the aggravation traditional loan paperwork and foot-dragging, according to Mercator.
While larger financial institutions have the capital to invest more heavily in technology to compete with alternative lenders, it can be a struggle for community financial institutions to do the same.
Mirador CEO and co-founder Trevor Dryer said he kept hearing about the pain point small business owners had in getting access to reasonably priced capital. "I thought there's a better way by enabling credit unions and banks to do profitable small business lending."
Dryer suggested small business loans are generally lesser dollar finances that typically lose money for many financial institutions because they use outdated manual processes for taking in that loan, processing it, and underwriting it. Dryer noted 70 percent of small business loans are under $150,000. "Our platform helps them turn those loans into very profitable loans."
"One of the things credit unions struggle with is how to deliver a smaller loan," Jim Gallagher president of Tallahassee, Fla.-based- business lending CUSO Member Business Solutions, a Mirador client, said.
Gallagher stated in credit union business lending there are two general camps. Those large enough, and willing, to spend the resources to hire professional originators to generate large loans. The other camp contains credit unions without originators and tools to effectively originate loans.
For more about small business lending read the full article in the Jan. 31 issue of CU Times.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
