Large retailers often use special financing deals as a means of turning would-be buyers into customers. Toronto-based company FinanceIt has created a service that enables smaller merchants to do the same.
Currently used by more than 3,700 merchants in Canada, FinanceIt is a point-of-sale (POS) lending option that stores or small-business owners can use to create a "palatable" monthly payment schedule for customers without having to put up their own capital.
The service is scheduled for availability in the United States by the end of summer 2014, FinanceIt CEO Michael Garrity told me when we spoke in late spring. "It's not our capital, we go to financial institutions that want to lend," he said.
FinanceIt raised $13 million in late 2013 from backers including TTV Capital, Inter-Atlantic Group, and Second City Capital to help build up its platform and prepare for the U.S. launch.
The service basically helps shortcut the process of applying for a loan – something that used to require faxing back and forth, and something that many small storeowners just didn't have the resources to manage. The merchant uses the FinanceIT mobile application (initially on iPad but Android is coming) to collect information from the shopper (such as an image of a driver's license), which can help speed up sales financing approvals.
So far, more than $715 million in loan applications have been run through the platform in Canada, according to the company's Web site. Once an application is approved, the money is disbursed to the merchant, and not to the consumer.
Right now, most merchants using the platform fall into several primary categories including vehicle dealers, smaller retailers with big-name competitors, home improvement services contractors, and healthcare professionals (such as dentists or veterinarians, Garrity said.
The loans can range from as small as $500 to as large as $100,000 depending on the vertical market; the interest likewise vary from 6.99 percent to 12.99 depending on the length of the loan and the credit of the borrower.
The service doesn't cost a merchant anything unless it chooses to market this option in some way.