Dealstruck started making loans to small businesses five months ago. This came after a successful seed round of financing where they raised a significant amount of capital (total was not disclosed) to see them through their first year of operations.
I chatted with co-founders Ethan Senturia and Zalman Vitenson earlier this month to discuss their progress. While Dealstruck is most clearly a startup it is more than a couple of guys working in a basement. They have a team of 11 people now with all the core competencies covered. Senturia also pointed out that their team has a combined 75 years of experience in alternative commercial finance.
What is Dealstruck offering? Right now they have one product: secured term loans for small businesses. But, they have big plans with several different product offerings in development. Let’s focus on the term loans for now. Here are the details:
- Term: 12 – 36 months, average 24 months
- $25,000 – $250,000, average just over $100,000
- Rates: 8% to 24%, average mid teens
- Blanket lien and multiple personal guarantees from business owners
Dealstruck is not targeting any specific vertical markets for borrowers and is instead seeking to serve a broad array of industry segments. They are finding good traction with businesses that are light on assets but have good cash flow. They are also not targeting startups; businesses must be profitable with a decent operating history.
They are working both from the top down as well as the bottom up when it comes to sourcing borrowers. By this they mean, they are looking for companies who have solid financials but just miss out on meeting the criteria for a bank loan. Maybe they had a personal credit blemish or some other hiccup that disqualifies them from getting approved at the bank. They are also taking on those companies who are looking to transition from a high interest loan product such as a merchant cash advance.