According to the American Banker, Fox Chase Bank is preparing to roll out an unconventional community banking web tool that helps small business owners better understand what their companies are worth.
The modeling tool is meant to serve as sort of a Zillow.com for valuing private companies, which can complete the data entry for the estimate within an hour. Fox Chase Bank plans to test various pricing models and views the data insight it gains as a benefit since it performs a sizable amount of work in financing acquisitions.
BizEquity provides the valuation model tool. It requires at least one year’s worth of financial data with the aim of collecting three years. That includes the industry the company is in, its annual income and its accounts receivable. All told, BizEquity looks at 63 metrics — quantitative and qualitative. It also considers the reason for running a valuation — including seeking a small business loan or looking to buy a business.
Small business lenders should keep their eye on this experiment. As more and more companies get out of being real estate investors, it’s likely that more applications will appear at your door to finance business acquisitions without dirt.
No word on whether Fox Chase intends to rely on the results of this model to value a company it might finance but trust me-that day is not far off. Meanwhile, think about moving those cookies out of your bank lobby and put something there that really generates business and benefits your clients.