In an era where small business lending is taking flight, with Lending Club and OnDeck now on the verge of IPOs, one startup is entering the market with a new focus; ApplePie Capital has announced that it is launching a lending marketplace for franchise businesses, the first of its kind.
The San Francisco-based service aims to make it easier for entrepreneurs to open up a franchise, like one at Subway or Burger King (BKW). Instead of waiting months to secure lending, ApplePie aims to help franchise owners expedite the process.
In an effort to reduce risk, ApplePie works with the corporations to find “pre-qualified candidates that the brand has already vetted,” CEO Denise Thomas said. The “franchise business is a proven business model and we’re trying to address the market the way the market addresses itself; in a standardized way, with a lot more predictability.”
The franchise customer base also lends itself to repeat business. ApplePie hopes the owners will come back for more loans as they launch additional franchises.
Thomas points to a Harvard Business School report, which says banks have reduced small business lending by 20% since the 2008 financial crisis, widening the need for a business like ApplePie. Although the small business lending industry has become increasingly competitive with dozens of startups entering the marketplace, ApplePie hopes the franchise specialty will help them capture a significant portion of the entrepreneurial community.
ApplePie’s lending platform is set to debut in the first quarter of 2015. The startup is venture-backed and has raised $3.77 million from Freestyle Capital, QED Investors and Signia Venture Partners.
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