One of the most difficult areas to maneuver as an entrepreneur is getting your hands on the cash you need when you need it. Capital is a tricky thing, you never have it when you need it and what you do have is never enough. So what’s a small business to do? Well, enter Lendo Limted. This caught my eye in the Wall Street Journal and here’s we entrepreneurs need to know…
It’s who you know
Lendo believes that a business’ creditworthiness can be more accurately judged by taking a peak at who they know on social media. They use your company Twitter, Linkedin and Facebook accounts to create a lending by reputation system. The company thinks that if you have a strong online reputation, you will be more likely to repay your loan.
Every business owner I know hates the mysterious formula in the FICO score and Lendo hopes to cash in on this fact. By using the reputation formula, they can pull from your business associates and former clients and find out a little bit more about how you run your businesses and pay your bills.
It’s coming, but not soon enough
Lendo is based in Hong Kong and the closest thing we have to it in our backyard is Neo Finance, the knockout punch is that Neo Finance provides car loans. So while this seems like a great idea and the perfect avenue for small business itching for some funding, right now this is still a business myth.
Social Media is not a reliable source of information
We all know that social media is a double edged sword in business, it’s great to get your name out there but not so hot when something negative takes off. The downside of using social media to vet loan applicants is that you have the risk of using tainted information, which is why FICO became so popular. The line that Lendo touts is that lending should be taken back to the individual reputation of the borrower, but we all know that reputation is more about perception than truth.
Now that we have summed up all the most important parts, it’s a great idea and if it ever gets up and running it could be a great source of capital for small businesses. Our greatest strength is our ability to be agile and this kind of resource could turn that agility into cold hard cash