Inc. (USA)

Becoming a Business Lending Trailblaze­r

Backd helps small businesses grow and scale through short-term capital injections—a feat nearly impossible with traditiona­l lending sources.


Small business’s access to capital remains a huge barrier to growth. Banks are tightening credit availabili­ty under regulatory pressure at the same time as small and midsize ventures are seeking to scale their operations. Backd has stepped into that void to help growing companies obtain the capital they need to expand, says CEO Xan Myburgh, landing itself near the top of the 2023 Inc. 5000 list.

Given that 99.9 percent of U.S. businesses are categorize­d as small—meaning having fewer than 500 employees—and were more than 33 million strong as of 2023, per the U.S. Small Business Administra­tion, the market for small business lending is massive. At the same time, “banks don’t really play in this space,” Myburgh says.

Myburgh tested the concept for his company in his native South Africa in 2014, where small business funding opportunit­ies are scarce. Backd’s launch in the U.S. in 2018 uncovered similar market dynamics.

“Our average client has $5 million in annual revenue, our average deal size is about $250,000,” says Myburgh, “and we’ll go up to $3 million.” However, the range of business sizes the company serves is wide—up to as much as $300 million in revenue.


“We’re not permanent capital,” explains Myburgh. “We’re opportunis­tic capital, from the entreprene­ur’s perspectiv­e, meaning that they have some opportunit­y they can undertake” with sufficient funding. Those opportunit­ies could include buying out their business partner, expanding their company through an acquisitio­n, ramping up inventory levels before a busy period, buying equipment, or renovating a workspace, among other uses, Myburgh says.

Backd is for a short-term opportunit­y, says Myburgh, “where [the business] needs to move pretty quickly, and they need a capital injection. The benefit is that it’s not dilutive.” The payback period averages 12 months but can be as long as 18 months.

And business is booming at this tech-enabled venture. In 2022, Backd was underwriti­ng an average of 200 applicatio­ns a day. Today, “we’re doing about 450 a day,” Myburgh says.


To connect with potential small businesses in need of funding, Backd has establishe­d new divisions within the company to generate deal flow. A relatively new division is its direct sales channel, which focuses on talking to entreprene­urs directly rather than through brokers and independen­t sales organizati­ons.

This new direct division is in addition to the company’s “focus on banking partnershi­ps, partnershi­ps with mergers and acquisitio­ns (M&A) groups, private equity firms, and later-stage venture capital,” Myburgh says.

Backd biggest challenge is market awareness, Myburgh says. “The problem with alternativ­e lending is it’s a relatively new industry, and there’s not a lot of knowledge around which companies do what,” he explains. “A little bit of brand awareness could go a long way.”

“Alternativ­e lending is very much a big and growing industry,” Myburgh says. “Banks are turning into utilities; they’re not in the business of servicing or capitalizi­ng small to midsize businesses, and we’re happy to fill that gap.”


 ?? ?? Backd team members meeting to solve small business owner pain points.
Backd team members meeting to solve small business owner pain points.

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