News Column

BIZWARE: Small-Business e-Loan

Cesar Hernandez, president of
Cesar Hernandez, president of

A new Web-hosted system aids in the origination and management of SBA-backed and other traditional small-business loans.

By Roger Harris
March 2002

For many entrepreneurs, timely access to U.S. Small Business Administration loans and other affordable lending programs can mean the difference between survival and disaster . If you get the cash when it’s needed, there’s a good chance your long-planned expansion will be a rousing success. Fail to get the money, however, and your business may spin its wheels amid stagnant revenues and unrealized expansion dreams. Some $700 billion is loaned to U.S. small businesses each year, but the potential small-business financing market is substantially larger, most experts agree. The problem facing many small business owners is that only about 10 percent of the more than 6,000 state and federal banks nationwide are actively involved in the SBA loan program. Like everything else government-related, the paperwork for both lenders and borrowers can be burdensome and time consuming. Financial institutions also can find it difficult to commit the necessary staffing to participate in the SBA program. Texas entrepreneur Cesar Hernandez recognized this problem and decided to do something about it. Mr. Hernandez is the president of, a developer of a Web-hosted system for the origination and management of SBA-backed and other traditional small-business loans. The basic idea is to make it easier for banks and other lenders to connect with qualified borrowers, and to make it easier for small-business owners to tap into the billions of dollars in affordable financing available every year. “There seems to be a lot of ongoing interest in our system,” Mr. Hernandez says. “It’s an all- Web-based interaction that saves time for the lenders and makes the process transparent for the borrower.” ECapNet, based in Irving, Texas, provides intermediaries and lenders a way to quickly receive, pre-qualify, and process loan requests from qualified small business owners. And it all happens in the paperless world of cyberspace. Intermediaries are institutions that are sanctioned by the SBA for processing funding requests. “With our system, the lenders get an immediate Web presence,” Mr. Hernandez says. “They get access to an efficient, paperless system for processing and managing small business loans.” Electronic document transfers and communications between lenders and borrowers save time and eliminate the bottlenecks that often make the borrowing process tedious and paperwork intensive. ECapNet also is able to present an individual business owner’s funding request to multiple vendors simultaneously, eliminating the need for applicants to visit a dozen different Web sites and type in the same information. “One of the problems small-business owners face is not getting any clear feedback when they make a loan request,” Mr. Hernandez says. “The idea with our system is to get feedback to business owners quickly. If they qualify, they know right away. And if they don’t qualify, they aren’t waiting around for days. Second, business owners can find out who in the lending community is most likely to be interested in their requests.” Since eCapNet launched its online small-business financing service in July 1999, the company has averaged about 100 inquiries per month from companies looking for funding. Not all businesses meet lenders’ qualification standards, but those that do are assured of having instant access to local and national lenders, according to Mr. Hernandez. For lenders, the benefit of participating in eCapNet’s online system is the assurance that they will receive only pre-qualified applicants. Using eCapNet is relatively simple. Users log on to and click on “Get Financing,” “Intermediaries,” or “Lenders,” depending on who they are and why they’re there. Small-business owners looking for funding then complete an online registration form. ECapNet’s service is free to small-business owners looking for funding. The company collects a fee from lenders when a loan is executed, Mr. Hernandez says. The Web site also offers tutorials on financing as well as financial calculation tools. Lenders can customize their eCapNet accounts to meet their specific requirements for screening and processing applications and managing loan transactions. Ultimately, Mr. Hernandez believes, his company will license the eCapNet system to lending institutions. “Competition is intense among lenders,” he says. “I think some banks would prefer for us to provide the system to them so they can automate their own internal loan origination and processing system.”

Source: HISPANIC BUSINESS magazine

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