Short-term loan companies analyze loan worthiness
Sep 06, 2011 Todd Milner
A slew of new companies are providing short-term financing for businesses and consumers using financial and social media data to analyze the likelihood of loan repayment, Forbes reports.These companies are attempting to provide faster, more efficient funds to people or entities in need. For example, Kabbage uses a person's log-in data for the popular commerce sites it sells its products on, such as eBay, Amazon and Yahoo stores. It then analyzes sales data, customer traffic and buyer feedback to determine whether the person or business is capital-worthy. Furthermore, startup BillFloat provides small-dollar loans for consumer bill payment. Its recent offering, called Less is More, uses a "proprietary decision process" to determine if a person is eligible for loans to pay cellphone companies, cable providers or insurers. The loans have a 3 percent monthly interest rate and are payable within 30 days. "With BillFloat's program, lenders evaluate an applicant's ability to repay a loan," said Ryan Gilbert, BillFloat CEO. "The payment of part of the unpaid bill by the applicant gives the lender the flexibility to provide a loan that is large enough to meet the consumer's needs, while cutting interest expenses and avoiding unnecessary credit."