Robert Tannenhauser compares Boefly.com to a well-oiled online dating service, with one exception ”“ “We know the people are going to fall in love before they get together.”
The online loan exchange connects commercial borrowers and banks in small-business loan originations and sales. It boasts a tally of 592 lenders in its short, seven-month existence.
“We launched in March and our exchanges have had more than $1.1 billion posted already,” said Tannenhauser, cofounder and CEO of Manhattan-based BoeFly. “So, it”™s working, it”™s catching fire and we”™re growing 25 to 30 percent a month because it”™s quality and it”™s efficiency.”
BoeFly, whose name derives from “business opportunity exchange,” can introduce a borrower in one state with several lenders across the country.
Alvin Sarter, BoeFly cofounder and managing member of Treuhold Capital Group in Scarsdale, said the streamlined process and usable interface also assist buyers of performing or non-performing loans that a particular bank wishes to sell.
“The websites or brokerage entities for the banks charge in order to get the set of papers or loan documents related to a particular portfolio for sale,” Sarter said. “You have to pay between $250 and $500 if you want to do further due diligence and start looking at the documents ”¦ BoeFly eliminates that. The banks post the documents online for free for any potential buyers to see them.”
Sarter said the time and cost of the process made him more reluctant to proceed forward with some loan purchases “because I”™d have to pay and that frustrates the process, especially for the banks because they get fewer customers looking at their deals.”
The BoeFly team reiterated that they are not a brokering entity. “A broker makes money by keeping the parties apart,” said Executive Vice President Michael Rozman.
Boefly.com is subscription-based; the company does not get paid upon closing a transaction. The subscription rate for borrowers was originally a one-time fee of $465; Tannenhauser introduced a stimulus discount in conjunction with the credit act, dropping the price to $99.
For lenders, it is $165 per month for a full-suite subscription.
David Nayor, BoeFly executive vice president, said a community bank posted on BoeFly a 30-year loan portfolio for approximately $33 million along with 335 supporting documents; 14 investors viewed the portfolio.
“For the efficiency of the bank posting one time on BoeFly”™s exchange, they”™re able to get out to 14 investors they most likely had not dealt with in the past,” he said. “It really lets a bank liquefy some of their assets that they need to, and the banks that become healthy will be able to lend again.”
All parties involved in the loan underwriting process ”“ from attorneys to appraisers ”“ can gain access to the loan documents and information via BoeFly platform.
“The users on the site ”¦ it”™s a captive audience,” Nayor said. “They pay us for their subscription. They”™re actively looking for deals for any number of reasons. When a small-business owner visits a bank, they may find out they”™re not lending for the particular loan they want ”¦ Or, they may just run into a wall.”
BoeFly has also proved useful beyond the commercial borrower and lender.
Fixed-income investment manager Cohen & Co. through Cohen & Co. Securities has bought and sourced government-guaranteed loans through BoeFly.
Steven D”™Agostino, chief technology officer, said that bidding SBA loans through the platform “provides us with an efficient source of loans, allowing us to stay focused on providing competitive bids to lenders.”
BoeFly also standardizes the loan application through its proprietary SmartForm, and allows both buyer and seller to customize search capabilities and settings, putting relevant loans in front of interested eyes.
“What happened when the banking crisis hit and banks pulled back from lending, it became even more difficult for borrowers to find lenders and for lenders to find buyers that met their particular criteria at the time,” Tannenhauser said. “This is a particularly troublesome recession, but we are seeing activity out there. There is demand. From our country”™s point of view, we need to get entrepreneurs capital. We need to be producing things.”
