• The U.S. Small Business Administration plans to issue a new SBA loan option for small businesses.
• The new pilot program will extend lines of credit of up to $5 million and will charge an annual fee and a maximum interest rate that is 3% to 6.5% higher than the prime rate.
• Lenders will receive a 75% guaranty on loans larger than $150,000 and an 85% guaranty on loans smaller than $150,000.

The U.S. Small Business Administration (SBA) announced plans this week to issue a new government-backed SBA loan option for small businesses. SBA Administrator Isabel Casillas Guzman unveiled the news in an interview with CNBC, which broke the news.

The new pilot program, which will extend lines of credit of up to $5 million, will allow business owners to either fund specific projects or borrow against their assets. Borrowers will be charged an annual fee and will face maximum interest rates that are 3% to 6.5% higher than the prime rate, topping out at around 12% to 15%.

The new loans aim to bring more compelling offers to both lenders and borrowers than the SBA’s existing 7(a) loan program. The 7(a) loan program incentivized lenders to loan to small business owners by providing guaranties to the lenders. Last year, the program backed 57,000 loans valued at $27.5 billion.

And even though the loan amount represents a 7% increase from 2022 levels, Guzman expressed that the growth is less than ideal. The same is true for two other SBA products, the SBA Express loan, which offers up to a $500,000 line of credit, and the CapLines loan product, which didn’t appeal much to lenders because of its complicated structure.

“This product is our aim to increase access to a simpler working capital line,” Guzman told CNBC. “It basically takes the best of our various options to create a pilot program to see if we can get more borrowers an affordable working capital line, versus just a pure reliance on credit cards.”

Lenders may find the new loans especially appealing, as they limit risk. Lenders receive a 75% guaranty on loans larger than $150,000 and an 85% guaranty on loans smaller than $150,000. “In an environment of higher interest rates, we want to make sure that the SBA is an option for more businesses,” Guzman said in the CNBC interview.

The SBA’s new working capital offering may impact the competitive landscape. Fintechs and traditional banks have provided lines of credit and working capital solutions with varying degrees of accessibility and interest rates for a long time. However, the SBA’s new government-backed line of credit promises accessibility and affordability for the borrower, as well as a 75% to 85% guaranty for the lender. While fintechs often attract small businesses with their quick approval processes and attractive user interfaces, they can come with higher interest rates and less favorable terms compared to traditional banks. Banks, on the other hand, offer more stable and lower interest rates but have rigid credit requirements and slower processing times. The SBA’s new program, which will go live “in the coming months,” will help bridge these gaps.

Photo by Amina Filkins

• Jio Financial Services parent Reliance Group launched its own financial super app, JioFinance.
• JioFinance serves as a single place where users can conduct digital payments, apply for loans, and purchase insurance.
• Jio Financial partnered with Blackrock last year and is expected to enter the wealth management space in the future.

TechCrunch unveiled this morning that Jio Financial Services parent and multi-sector conglomerate Reliance Group launched its own financial super app, JioFinance.

Jio Financial’s new JioFinance app launched today in the Google Play store and aims to serve as a single place where users can conduct digital payments, apply for loans, and purchase insurance. The bank accounts are held with Reliance-owned Jio Payments Bank, which was granted a banking license by the Reserve Bank of India in 2015.

“Introducing JioFinance, for your fast and secure UPI payments, seamless bill payments, and timely reminders,” the app description reads. “Enjoy instant rewards and benefits on all UPI transactions. Instant account opening in a few minutes, with zero balance feature, interest rate as high as 3.5% and a digital passbook, with Jio Payments Bank. Take control of your finances with easy tracking and analysis of your spends in a few clicks. Pay bills, track expenses, and save money with the JioFinance app!”

Today’s launch comes after Jio Financial formed a partnership with Blackrock in 2023 to add wealth management offerings to its existing insurance and lending offerings. Also in 2023, Jio Financial announced it was leveraging alternative data to enhance its personalization efforts.

Unlike the U.S., India has a growing scene of true super apps players. Reliance’s competitors in the space include Tata Group and Paytm. Tata Group’s Tata Neu aims to integrate a range of services from e-commerce and finance to travel and health under one platform. And Paytm, which originally launched as a mobile wallet and payment app, has expanded into a super app by adding banking, financial services, and e-commerce functionalities.

• Business banking platform Rho has partnered with Navan to launch a jointly branded tool that will allow Rho’s business clients to add and manage their Rho Corporate Cards directly within Navan.
• The partnership is leveraging Navan Connect, a card-link technology that extends Navan’s No Expense Reports experience to authorized expense partners.
• The new, joint tool offers business clients a unified interface that saves them from having to coordinate multiple applications across separate vendors, or having to manage different costs and workflows.

Rho has teamed up with Navan to launch a new, jointly branded tool that will help simplify the way businesses manage their finances.

Leveraging Navan Connect, the new co-branded solution will allow businesses to add and manage their Rho Corporate Cards directly within Navan after configuring the cards using the Rho platform. Businesses can use the new finance suite to manage corporate travel and expenses, enforce expense policy compliance, send payments, and close their books. The unified interface saves businesses from having to coordinate multiple applications across separate vendors, or having to manage different costs and workflows.

Launched in 2023, Navan Connect is a card-link technology that extends Navan’s No Expense Reports experience to authorized expense partners. Using this technology, businesses can embed travel and other spending policies with Rho, which will offer finance departments control of and visibility into employee expenditures.

“We’re excited to partner with Navan to help businesses simplify the finance stack and save time and money,” said Rho Co-founder and CEO Everett Cook. “The years we’ve spent building the world’s best business banking platform infrastructure opens up ample opportunities for Rho to explore compelling partnerships with world-class organizations like Navan.”

New York-based Rho was founded in 2018 to serve as an all-in-one financial platform for businesses and organizations. In addition to checking and savings accounts and credit cards, the company offers expense management, AP automation, treasury management, and now business travel expense tracking and management.

Formerly known as TripActions, California-based Navan was founded in 2015 and leverages AI to create an enhanced user experience around booking corporate travel. Navan has made four acquisitions and now counts 2,900+ employees across 40 markets.

“Small- and medium-sized businesses need a complete suite of financial tools to get them up and running quickly,” said Navan Expense CEO Michael Sindicich. “With Rho, Navan customers now have an out-of-box set of financial tools from a trusted financial partner to help them proactively control spend as they scale while increasing operational efficiencies so companies can focus on the objectives that matter most.”

Photo by Ketut Subiyanto