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Small business owners know they no longer have to rely solely on big banks if they need a loan, line of credit, or other form of working capital. A number of alternative lenders have popped up with friendly rates and shortened approval times that make applying for a loan so much easier. It’s not unlike how Uber has revolutionized transportation, or Amazon transformed retail shopping.
Relatively new and certainly noticeable is InterNex Capital. Founded in May 2015 and launched officially a few months later, this digital lender is one of the newest and more unique options available in the alternative lending space. Here’s what small businesses can expect when applying for a revolving line of credit with InterNex.
Some small businesses start out with a revolving line of credit. It’s different than a term loan or other small business loans—the lender extends the borrower a pre-approved limit, like a credit card, and the borrower can choose to draw on that line as much as they like (up to that limit). You don’t have to borrow all of the money at once, and repayment is usually on a flexible basis, depending on terms. The revolving line is a good way to manage cash flow—and can help make up for shortfalls without taking on too much debt.
A big differentiator when you look into InterNex is how they go about assessing your application, compared to other lenders we’ve profiled. They want to see not only that your company is healthy and viable, but they also want to know that the companies you do business with are healthy and viable as well.
They’re most interested in what your clients owe you and whether they are likely to pay back. “The main difference is we’re a collateralized asset-based lender, versus a cash flow based lender, so we lend against accounts receivable,” says Simrita Singh, Director of Marketing at InterNex. “We’re still in a class of alternative lenders, but we offer a more bankable product.”
Even if you work with reliable customers that pay pretty promptly, you could find yourself facing a cash flow gap if they’ve put your business on 30, 60, or 90-day payment terms. A line of credit might help you with your gap—and InterNex might just be the solution for filling it.
InterNex offers a line of credit ranging from $250,000 up to $5 million. The revolving nature lets business owners make multiple draws from the line and watch the outstanding balance go down as invoices get paid. The line of credit is “evergreen,” and you get a chance once a year to renew or look for another provider. And you won’t have to pay upfront due diligence or application fees.
Not every business is a candidate for these loans, however. Because they’re an asset-based lender, InterNex tends to work with businesses in industries like manufacturing, wholesale, distribution, and service companies.
“Businesses that are looking to InterNex for a line of credit often have concentration of accounts receivables on their balance sheet and are looking for operational and growth capital,” says Singh. “B2B industries have a cash flow gap due to stretched receivables.”
To strike a deal, you need to meet InterNex’s minimum requirements. These include being in business for at least 2 years, having more than $1 million in annual revenue, and being able to use accounts receivable as collateral.
Also know that InterNex doesn’t lend to certain industries, such as construction or medical billing companies. And they only deal with U.S.-based companies with U.S.-based customers. Finally, they don’t have lending licenses in California or North and South Dakota yet.
You’ve got 2 ways to begin the application process. One involves working through a strategic partner, the other requires contacting InterNex directly.
Strategic partner applications
Because InterNex is fairly new, they want most of their applications from small business owners this way—passed on by strategic partners that apply on their behalf.
“The main origination channel is through referral partners,” says Singh. “These strategic partners can submit applications for us.”
Referral partners for InterNex are business brokers, such as CPAs and banks, or sites like Fundera. There’s a whole loan broker community that can refer you and your business to InterNex if they view your business as the right fit.
Contacting InterNex directly
If you read this rundown of InterNex and feel their model is a good match but you haven’t been put in touch by a strategic partner, you can contact InterNex directly to begin an application.
“We have a partner portal that you can access off of our site,” says Singh. “It’s a transparent process for our partners and potential clients. Eventually we’ll have an application form online that business owners can use, but right now our website is purely informational.”
Visit the InterNex website to see confirm you’re a good fit, and then call the company to get more information on how to apply through them directly.
InterNex receives applications through their online portal, and they expect to see:
The sales team reviews your application in the portal, to ensure everything is complete and appears promising from their perspective. It’s a short process, so you can get pre-qualified in about 30 minutes.
On top of the health of your business, they look at the health of those you do business with—your clients and debtors.
“We have to make sure that whoever is paying our client is stable and paying on time,” says Singh.
InterNex also reviews “concentration risk”—they want to know you have a range of clients so that if one industry goes belly-up, you’re not going to go down with it and be unable to meet your loan obligations. So if you sell to only 1 or 2 clients, InterNex is less likely to view your business favorably. The risk is higher for them to take you on.
If you do meet their criteria, you move on to the next step in the process. We’ll walk you through underwriting in part two of our series on working with InterNex.
InterNex feels like they’ve identified a large gap in the alternative lending market. While banks don’t often focus on lines of credit as small as $250,000, lots of other lenders focus on lines up to or less than $50,000. That’s a sizeable gap that the company hopes to help address.
If you find yourself in that gray area, consider finding a strategic partner that can help you start an application with InterNex, or visit their site for more information on how to apply yourself.