Ryan Cave and Rajesh Krishnan converted their frustrations with banks into the motivation to start BelTowr, an online financial services provider designed for small businesses.
Tired of lenders who charge small business customers unreasonable checking account fees or penalize those who don’t maintain a minimum balance (and that’s if they can get a loan in the first place), the entrepreneurs developed a different model.
The company provides debit accounts for $10 a month and doesn’t charge customers “based on mistakes,” according to Cave, which may appeal to cash-strapped firms trying to survive and thrive.
They also share a dedication to giving back to their community as well, designating 20% of their monthly fee revenue to assist community projects.
Small businesses hit hard by the recent financial crisis and recession have been slow to recover, prompting questions about whether there’s a credit gap for the sector, according to Karen Gordon Mills, a senior fellow at Harvard Business School and the university’s Kennedy School of Government. In a July 2014 working paper, she said one answer may be the emergence of a “dynamic market of online lenders that are using technology to disrupt the small business lending market.”
BelTowr aims to enter the fray, describing itself as a provider of commercial banking services. The start-up, currently testing its products with initial customers, would join companies like OnDeck, Kabbage, Prosper, Lending Club, Fundera and Biz2Credit, according to Mills.
A commitment to community through its Something Better Fund helps to set belTowr apart from traditional banks, according to Cave. He elaborated on this and other aspects of the Portland, Oregon-based company’s business plan in a recent interview with NerdWallet. Here are some excerpts from that conversation:
Q: What is belTowr and how did it get started?
A: BelTowr is a nontraditional bank built for the sole proprietor and small business owner. We’re helping those caught between the needs/cost of a consumer and a commercial account by offering a service tailored to their business.
Q: How does belTowr work?
A: You can deposit in any way you prefer: ATM, wire, ACH, merchant account, etc. BelTowr issues you a personalized card to make purchases either point of sale or otherwise. We offer an intuitive web or mobile user interface for you to review statements and manage your money.
Q: Why focus on small business?
A: Small businesses are the backbone of the economy and are what create the culture of a neighborhood. Our mission is to empower a small business by creating a solution which is intrinsically good for it and the community it calls home.
Q: What makes belTowr special?
A: Our focus: Small business banking. Our fee structure: BelTowr’s accounts are very straightforward and highly transparent. Our accounts are $10 a month with no minimums/maximums and no fees based on mistakes. Our involvement in the community: From that $10 a month, $2 immediately goes to the Something Better Fund, which is used in conjunction with crowdfunding (for) community projects. It’s not based on the profit we generated that year, or how much is left after our executives are paid. It is part of our budget from day one, just like the electric bill or office lease.
Q: What are the biggest issues in small business finance?
A: Deception. They claim to be a partner to your business but set you up to fail using a friendly face to enforce deplorable policies. Small business owners generally don’t have the assets traditional banks value. BelTowr ignores the status quo to bring a useful and powerful tool to the small business owner while providing access to capital through carefully selected partners.
Q: How is belTowr funded?
A: We have been bootstrapping for 11 months and have reached a point where we need capital to move forward. We will be raising a modest seed through GoFundMe in a few months.
To find out more about belTowr, check out the company’s newsletter.
BelTowr founders Rajesh Krishnan and Ryan Cave/Photo courtesy of belTowr
The post BelTowr Plots a Course to Build Small Businesses and Communities appeared first on NerdWallet Credit Card Blog.
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