Think about it like a dating site, except members are looking for loans instead of love. The matchmaker is Magilla Loans, a free, anonymous search engine that helps small business owners to find loans directly from reputable banks across the country. Created by a Sacramento duo, Magilla went live in September 2015. Since then, the founders Dean Sioukas and Chris Meyer say $300 million worth of loans have come through the system.
“We all know that getting a business loan isn’t easy,” says Sioukas, who is also a lawyer. “They don’t give you money just because you walk in the door. Bankers like to say it’s a relationship business but, in today’s world, why does the banker have to be down the street?”
The website was borne out of necessity. Three months ago, Meyer, a funeral home owner (and also a lawyer), wanted to acquire a new funeral home. He struggled to find a loan after weeks of pounding the pavement.
“Why are you wasting your time?” Sioukas recalls asking Meyer one day. “Just find a business loan search engine and figure out who’s active in the area.”
But Sioukas discovered a tiny problem with the advice he gave his friend: The loan search tool he thought could help didn’t exist. Rather than wait for someone else to build it, the duo started designing the site themselves.
In the process, they discovered what would become Magilla’s best feature: anonymity for users. If you’re a borrower, you must fill out an 11-question form with information about your business and what type of loan you are seeking. Magilla’s banking partners will then bid to offer you the most competitive rates and attractive loan terms available. But the website nevers asks for your name, social security number, phone number or any financial data to receive loan options.
“As lawyers and people who hold their privacy and financial information with their lives, we would never put that information on the the Internet,” Sioukas says. “But at this initial stage of the loan process, I’m just searching to see who is active, who is aggressive, who has loan programs that will meet my needs today. At this stage, why do you need to know my name?”
The anonymous feature was a big bonus for John Pappas, owner of Pappas Investments, a real estate investment company based in Sacramento. This allowed the project to speak for itself. Recently, he was looking for a $74-million loan to acquire office buildings. He knew he needed a national bank, but didn’t want to waste time and effort going bank to bank during the day. Magilla allowed him to find the right lender from his desk.
“It’s still possible to do things the old way,” he says, “but it could’ve been much more painful, more time-consuming.”
Unlike a brokerage firm, which can charge borrowers for transactions with banks, Magilla is a free service for borrowers. The startup makes money through a monthly subscription model with banks. The amount these lenders pay will vary from state to state. So far, there are 30 bank brands subscribed to Magilla. Sioukas believes business owners find value in Magilla because it’s simple, efficient and gives them loan options they might not have known about otherwise.
“It’s not a car loan or a home loan, where you can rip through it really quickly and get it on the spot,” Sioukas says. “Business loans take time. You should start on the right foot. That means educating yourself and getting yourself options, because then you have market power.”
Do you know an entrepreneur who has what it takes? Recommend their company for our “Startup of the Month” here.