Nationwide and BlueVine will partner to provide customers of the insurance giant direct access to the small business lender’s online platform, the first in what is likely to be a series of initiatives between the two firms.
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It's the latest example of how Silicon Valley startups are transforming the banking sector. Under the new deal announced on Thursday, Nationwide customers are able to apply for capital from BlueVine directly on the insurer’s website.
With Nationwide’s national reach, BlueVine CEO Eyal Lifshitz says the deal will allow the firm to "reach businesses who were not aware of us before.”
“This is the first of likely many initiatives. We have several down the pipeline, some of them we are even talking about for this year,” he told Fox Business.
To obtain financing from one of the large lenders, prospective customers often need to visit one of the thousands of physical branches across the U.S. and fill out cumbersome paperwork. Even with the hurdles, banks are often hesitant to provide capital to early stage companies.
Startups like BlueVine, however, allow owners to conduct the entirety of the transaction online in as little as 10 minutes, making it easier for small businesses – most which bring in less than $5 million in annual revenue -- to quickly obtain capital. BlueVine currently provides credit lines up to $250,000 and as much as $5 million in invoice factoring.
It’s a key reason why the sector is booming. In 2017, PayPal bought Swift Financial to be able to offer a similar service to small businesses. Amazon loans to companies that list products on its website, while Google and Square also have lending arms.
Recognizing the threat, large banks are investing and partnering with the upstart companies in the space. Citigroup, for example, is an investor in BlueVine, while JPMorgan Chase teamed up with On Deck Capital.
Even rural lenders are keeping an eye on the burgeoning industry.
“They have a better delivery channel,” said Southern Bancorp CEO Darrin Williams. “I do think it will come, [but] at this point I don’t see a lot of competition.”
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BlueVine has ongoing conversations with other companies – including large banks and Intuit, which sells accounting software to small business -- on potential partnerships.
Financial institutions “realize that they are not going to be able to do everything for everybody,” Lifshitz said.
BlueVine last year closed a $12 million funding round -- including investments from M12, Microsoft’s venture fund -- bringing its Series E total to $72 million. Lifshitz is not ruling out another fundraising round in 2019.