Intuit, the company creators of products like QuickBooks and TurboTax, is triumph into the small business lending space. With QuickBooks Capital, QuickBooks users now get access to small business loans up to $35,000 for up to six months right from within their bookkeeping and accounting software.
Its appeal stressing that Intuit is lending its own money here. This is not any kind of referral service that connects businesses with lenders.
Inuit is uniquely suited to innovate in this space because of the extent and depth of data small businesses have entrusted. This allows Intuit to get a full depiction of the present financial state of a small business and — more importantly — the ability to expect that company’s potential cash flow and ability to pay back a loan.
Why does this matter? Typically, lenders in the small business space have to make their decision based on a very less amount of data. So to keep their risks low, they often won’t lend to companies that are just started, though these are closely the kind of businesses that can often benefit from a small loan to leap on their next opportunity to expand, buy in bulk or bring on new customers.
Intuit shared experience that its credit model is based on 26 billion QuickBooks data points. With this plethora of data both about a specific business and comparable businesses in parallel locations and life stages, Intuit’s machine learning models can make a risk profile and offer competitive rates — even for very new businesses that have only been around (or have used QuickBooks) for six months. A spokes person stressed that one data point that’s mainly important here: understanding a company’s outstanding debt, which other lenders typically don’t be likely to have a lot of data about but which Intuit Capitals models can predict with a very high level of confidence.
While the team clearly doesn’t have a lot of data about its loans yet (the company has only been beta testing this service with a selected number of customers in the last few months), She is very convinced that the default rate will be low and she stressed that it’s Intuit’s Capital credit model that allows the company to make loans to companies that wouldn’t have otherwise qualified for one.
The lending process will be done itself algorithmically. The service uses multiple data sources ahead of QuickBooks data, including bureau data, and then provides a company that’s looking for a loan offer. That offer will include the APR and a detailed down run of the monthly payments a company will have to make. The team argues that its rates will be reasonable with those of other lenders.
Completing the overall loan process only takes a few minutes. Then, as a business pays reverse its loan, the model learns even more about this company and can then potentially make a better offer the next time approximately.
QuickBooks Capital is yet another example of how important access to lots of raw data is in this new world of machine learning process. Intuit has clearly implicit that it sits on a goldmine of small business data and that it can use this to expand its product portfolio with services that others merely can’t offer because they don’t have this kind of data to teach their AI models.