Dealstruck, a provider of online term loans and lines of credit, has reportedly shut down operations. As of Nov. 15, 2016, they are no longer accepting new loan applications. However, existing customers will continue to have their loans serviced. Dealstruck’s homepage offered no indication of the shutdown.
Ethan Senturia, CEO of Dealstruck, told Crowdfund Insider:
“Although we are not currently originating new loans, we are continuing to provide our clients with the high-level of service they have come to expect from us. Over the past few years, we’ve helped thousands of small businesses create thousands more jobs, and we’ll be looking for strategic options to allow us to continue delivering on our mission to provide unique, appropriate, and affordable financing to small businesses nationwide.”
The Dealstruck news comes at the end of a hard year for the alternative lending industry. However the small business lending industry seems to show continued growth. A new report from Business Insider estimates that alternative small business lenders, including Dealstruck and other providers, originated $5 billion and had a 4.3% share of the small business lending market in the U.S. in 2015. And the outlook for alternative small business lending platforms shows an upward trajectory—the same report estimates the industry will originate $52 billion and gain a 20.7% share of the total market by 2020.
Part of this growth can be attributed toward more small business funding companies entering the space. As more players move in, alternative lending companies like Dealstruck and others will struggle to differentiate themselves from the pack.
The gap between the options business owners want to qualify for—the lowest-cost options, with the best repayment terms, that are difficult to qualify for—and options that provide speed and ease of qualification at an arm-and-a-leg cost still exists. Borrowers are becoming more interested and aware of options aimed at filling that gap, including providers like Funding Circle, Able Lending, and Bond Street. Banks, though slow-moving, are starting to catch on and team up with alternative lenders or even provide their own faster and easier financing options. (Read here about Wells Fargo’s short-term financing option introduced earlier this year.)
What it Means for Small Business Owners
Business owners often have a fear of taking on debt, but strategically taking on an amount of debt that your business can handle can mean the difference between accelerated growth and a plateau, or even downward trajectory, of your business growth.
As you consider the future of your company, keep in mind that there are good financing options available, but not every one will be right for your business. Utilize tools at your disposal, like Nav, to know what you’re getting yourself into before you sign a term sheet, calculate the true cost of financing options, and understand what you’re likely to qualify for before you apply.