Is Software as A Lender Replacing SaaS

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There are tons of companies, small ones, generally first-time businesses that started not so long ago but are quite successful in their field. According to a report, one of them, a landscaping company, one that also grew faster than the rest, to keep up needs a loan. The loans are not so easy to get, as we all know, due to tons of documents and much time.

The loan, on the other hand, is quite wanted because this company without additional money not only will have to turn down a lot of new customers but also will be unable to get new equipment and hire new employees. Also, the reputation will be destroyed. So far, there were three failed bank attempts because the answer to this company’s question was always the same – millions of documents and much time. Sometimes companies have neither the time nor the resources required by these institutions.

Something weird happened after the rejects. Its SaaS provider contacted the company by email and offered to manage the company’s job status, payroll, scheduling, and communication with the workforce. The provider also made a SaaS + payment system for it and also revealed that there was a new product in the works coming very soon. The SaaS provider verified everything this company needed for a loan, and this allowed 1-year loan approval to cover every salary and equipment. With only one click, the company is now able once again to improve its status.

This company got lucky for sure. There are tons of other small businesses, as stated before, that have the same problem but get no solution. The process lasts for about 3 months, and nobody guarantees approval. Even if somehow the company gets approval, tons of administration tasks follow.

Should SaaS companies increase their TAM by Placing themselves into Adjacent Products and Service?

Yes! At least the example above indicates that. Payment processing allows these companies to expand on the addressable market and convert into vertical SaaS plus payment companies. For example, Toast enlarged their TAM 3.5x by implementing payment processing into their SaaS. After businesses, customers also want to include SaaS providers as a payment processor.

Fortunately, the case with the company before proves that SaaS should not be used only for payment services. It should offer loans as well. After all, they have all the needed information.

Software-as-a Lender can happen if you combine vertical SaaS and payments with financial products. Many companies already use SaaS to stay relevant and to beat the competition. The implementation of SaaS should also give them another feature, multiple other financial services, for example. If you take a look at SingleOps, landscape SaaS company, you will see that besides customer management and payment tools, it gives many different industry-specific services. They already have all the information, so they are more informed than any lender so far. They should only use the collected data to power the loan process.

SaaL companies will orient themselves by the provided data. They would know how much money their company needs; on which way everything will be paid back and more.

On the other hand, banks already know that they are not capable of lending money as fast as the company wants. According to resources, 25 percent of banks are competitors to SaaL. Plus, the company owners said that they do not even go to banks when it comes to small business loans. They consider non-bank lenders before making a final decision as well.

Many wonder if this idea would work. Well, if you look at Square, the most successful SaaL business in the world, you will see an implementation of payment processing, payroll, inventory management, tracking, and sales analytics. Its lending arm, Square Capital, gives loans from 500 dollars to 250,000 dollars. The loans come to you in just a few days, and the application process has never been easier. Of course, they charge a fee for the loans, but who doesn’t?

The main difference is the wish SaaS plus Payment companies have. The wish for one small business to succeed and the wish to see what one company will miss if the loan is not approved. Financial products are needed for those in need and not only to small businesses but to specific industries as well. Plus, there is a low cost from which everyone takes advantage of. Also, they are incredibly efficient and reliable.