When asked why merchants should go to Expansion Capital Group LLC for capital financing, Jay Larson, the company's co-founder and Chief Operating Officer, said, "Honestly, they shouldn't. We ask every merchant we talk to if they have spoken to their bank. If a traditional bank is able and willing, meaning they can meet their underwriting criteria to give them money, that is where we send them."
Expansion Capital provides three to twelve month capital financing to merchants who do not have the time to wait four to six weeks to get approved for a traditional bank loan. "We have people with traditional lines of credit, but it takes time for the banks to move," Larson said. "If the merchant's freezer breaks down then he needs the money now so he can get it repaired."
Founded in July of 2013, Expansion Capital reported it has grown significantly in a short time. "A broad group of people for the most part are ignored by traditional banks," Larson said, adding that it is partly due to increased government regulation. "Banks are chasing their tails, and they are not effectively servicing anyone for less than $1 million," he said. "Really, that is where we come in and say, if they don't want to service you, then let's figure out how we can service you."
When applying for financing with Expansion Capital, customers receive quotes within 24 hours and funding within 24 to 48 hours. The quick turnaround time is the result of a sophisticated and modern underwriting process that the company believes will impress potential ISO partners.
"We have what we call an Expansion Score that we put on every deal during underwriting," Larson said. "It is a series of different indicators that we look at. It spits out a score that says this is where we look at it from a scale of one to 100. We know if it is in the upper echelon, then we are going to give the applicant a longer-term loan with a better rate; if it's borderline to the lower end of where we want it to be, then it is going to be a shorter-term with a higher rate."
In addition, Expansion Capital noted that repeat customers can find the process to be quick, sometimes quicker than when the business relationship was first established, because much of the underwriting information was previously documented and can be used to fast track the application.
Constant news headlines about government regulation of banks reinforce Larson's belief that the capital finance industry should protect itself with vigilance. "Every other regulation I have seen in the industry has come about because of bad players," he said. "My hope in this industry is that there are groups formed, coalitions formed, to try to police ourselves and make sure here are the best practices [and that] people not following those practices get pressured out by the industry."
Larson noted that one of his company's highest priorities is to help customers grow their businesses. "We want to evolve as a business, and we want merchants to evolve with us," he said, adding that Expansion Capital wants to help merchants "get over whatever hump is in front of them to get to the next spot" and be more than a lender by providing content, education and fostering trusted relationships with its customers.
Expansion Capital is also considering plans to become a full-service finance company by providing longer term financing with lower interest rates. "As we evolve, we want to figure out how we can offer group rates at a discount for merchants – whether it is strategic partnerships on our side, trusted partnerships that we know are going to do right by our merchants and just pass along that relationship," Larson said.
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