The Business Why
Danny and Lauren Chaldez started the Stag Hair Parlor on Melrose Avenue near La Brea with a vision that the business would give them financial stability and let them reach their goals as a family.
They had a vision and a dream. As Lauren says, though, "we hadn't incorporated and we didn't have business credit."
The Business Reality
Danny noted they were unprepared for the realities of running a small business. "I wish I had talked to an accountant at the beginning. I was learning the books as I went along." Then unexpected expenses that they could not have projected surfaced and sucked up cash flow. "Things like plumbing," said Danny. "We found out we needed two sinks instead of one and would ask 'How much is that going to cost us?' and 'Oh, my God, I didn't think it would be that much!'"
Initial funding for the hair salon came from family and friends but the couple didn't want to risk hurting relationships when they needed money to expand. Danny went the route of asking Wells Fargo and Chase banks for help but he got turned down.
The Funding Solution
He searched the Internet for small business loans and came across OnDeck, a technology platform that lets business owners apply online and funds loans within days. Danny needed $ 35,000 and his loan got fulfilled within a week.
OnDeck CEO Noah Breslow said loans for "Main Street" type of independent businesses are the company's sweet spot. "Traditional banks can make the million dollar loan but they have the same overhead to make the $40,000 loan." He added that banks are not positioned to leverage technology and work with a high volume of small loan requests.
OnDeck funding started in 2007 and has loaned $1 billion dollars with $80 million dollars deployed to businesses in greater Los Angeles.
Restaurant owners comprise the largest category of loans funded with hair salons, auto body shops, and doctor and dental shops in the top ten. OnDeck has created a proprietary scoring system to gauge the credit worthiness of business owners.
"We want to know how they manage cash flow and take care of their business operations instead of looking at their personal credit score."
Noah says the default rate is in the single digits and Lauren Chaldez says OnDeck was a lifesaver during a critical juncture in their business operation.
Learn about Stag Hair Parlor here.
Learn about OnDeck's funding platform here.
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