Capital Access Network’s Online Lending Platform CapTap Coming to Tablet Soon

Capital Access Network is launching a tablet version of its CapTap online lending platform for small businesses in the next few weeks, Bank Innovation has learned.

That’s right, not just mobile, but specifically tablet. It has long been wondered whether mobile is an effective platform for originating loans, and Glenn Goldman, CEO of Capital Access Network, addressed this when he said that “phones are too small.” The tablet app will be introducedat the Electronic Transactions Association Annual Meeting and Expo in New Orleans at the end of April. “In 60 to 90 days, our end-to-end solution will be available” on tablet, Goldman said.

Capital Access Network launched in 1998 with the mission of helping small businesses succeed by providing them with loans that traditional lenders would not provide. “It’s still hard  today, even in the improving economy, for small businesses to get loans,” Goldman said.CAn was founded by the owner of a Gymboree franchise. The business had a steady stream of credit-card income every month, but it varied somewhat, dipping in August, for example. To a bank, this looked like a risky loan.

The Gymboree owner realized that credit card statements were better indicators of business performance, which inspired her to develop CAN’s risk=-scoring model.

Goldman offered the following anecdote to show the difficulty small businesses present to banks. “A small business owner might see inventory he needs on sale and purchase it all at once, running up his credit card. That’s a smart business decision, but to a bank, it looks terrible.”

Capital Access stepped into this lending gap, using a business’s sales history as a predictor of future success rather than solely relying on the owner’s FICO score. “We’ve invested $3 billion in future daily sales in the past 15 years,” Goldman said. Capital Access Network has a write-off rate of just 5% on its portfolio. CAN has proprietary data models based on its “$3 billion worth of experience” and operates in the world of what is called Big Data these days.

Goldman is not a fan of that term, preferring to call it, “smart data — actionable, decision-able live data.” The company is looking to partner with banks to put its data and models to use, and is in discussions with seven of the largest 10 banks in the country, according to Goldman.

“It’s difficult for banks to make loans, what to them would be micro-loans, to small businesses,” said Goldman. The challenges run the gamut from systemic or regulatory hurdles, a lack of fine-grained tools or models that accurately predict small business success, a lack of refined user experience for laon applicants, and of course, risk management.

“We’ve moved from having lines of credit with big banks to co-branding with big banks,” Goldman said, citing the example of Wells Fargo. It is also a partner of the Utah-based WebBank.

CAN’s scoring model is more granular than a FICO score, according to Goldman. “A 650 FICO score doesn’t tell you much about how a business will do. By our model, if you’re a 7… that means 7% of transactions will not perform.” Lower scores, of course, are better in this model.

“Our model is real and tested,” Goldman said. “Banks have watched us perform since 2008. And our strongest performances have been since 2008.”

CAN has seen accelerating growth in its loan portfolio over its 15-year history. It took 10 years to reach its first $1 billion in loans, 3 years for the second billion, and two years for the third. Goldman said he expects the fourth billion will arrive in just under 12 months.

“70% of our customers take additional funding,” Goldman said.

With CapTap going mobile, it’s hoped the already streamlined application process will get even more frictionless for small business owners. “Our system can decide on an application in under two seconds,” Goldman said. Paper is completely eliminated from the process, which relies on APIs and the uploading of data over mobile devices.

For the loan applicant, this means a total application time of under eight minutes, with a wire transfer of funds initiated as soon as that same day.

“The small business environment is significantly better than it was two years ago,” Goldman said. “Demand for loans is growing.” Banks are increasingly aware of the need for tech partnerships, as was discussed extensively at last week’s Bank Innovation 2013 event. Businesses like Capital Access Network have the tools to help them forge new relationships with the key demographic of small business owners.

Capital Access Network is based in New York City.