Funding Circle USA Acquires LeapPay to Speed Loan Approvals

All online lending platforms have to balance two things: a thorough underwriting process from their end and a quick approval for the borrower. Some companies in the small business lending space have chosen a fast and more automated approach. Other companies, like Funding Circle prefer a human to control the underwriting process.

But of course, nothing is completely manual, particularly when it comes to online lending. All platforms use some level of automation. And this brings us to the Funding Circle acquisition that was announced today.

Funding Circle has acquired LeapPay, a company that has done a lot of work around automated underwriting in its invoice financing business. I reached out to Sam Hodges, who heads up Funding Circle’s US operations to get some more details.

“What this deal is really about is buying some technology that will help with the customer onboarding experience,” said Hodges. “LeapPay has a really good mousetrap for onboarding customers that makes it easier to pull information in a standardized format.”

Another benefit of this acquisition is that LeapPay integrates with the three leading accounting software platforms: Quickbooks, Freshbooks and Xero. While Funding Circle has previously integrated with Quickbooks, adding two more platforms gives them access to a broader range of small businesses.

But the big benefit is speed. “Today our loan approval process takes about seven days”, said Hodges. “This acquisition will allow us to shave a day or two off that process.”

When I asked about the invoice financing business, that was LeapPay’s core business, Hodges did not commit anything. He said that Funding Circle will be adding small business loan products over time such as equipment finance, commercial property, invoice financing and others. But there is no set timetable nor has anything definite been decided upon.

Bottom line is this acquisition will make it easier for small businesses to obtain a loan from Funding Circle. This should lead to a higher conversion rate for them and more loans for investors.