Gina Taylor Cotter, Global Head of Small Business Financing at American Express

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While there is still a shortage of capital for many small business owners there are far more options today than there was five or ten years ago. Not only are there more options but these options are more convenient with simple loan applications and quick decisions. One of the newer entrants in this space, providing a range of different products, is American Express.

My next guest on the Lend Academy Podcast is Gina Taylor Cotter of American Express. She is their global head of small business financing and has been instrumental in bringing some of these new offerings to market. They have a large customer base and rich data on these customers so they have unique advantages in providing new financing options for  small business owners.

In this podcast you will learn:

  • The different roles Gina has held inside American Express.
  • The broad set of financing products that Amex offers small business owners today.
  • Details of the small dollar loan offering they have and why they created it.
  • What they have learned by studying the leaders in the online lending space.
  • How they are able to provide a decision on these loans within 60 seconds.
  • Details of their Working Capital Terms invoice financing platform.
  • How they are using the information on their card customers to underwrite this product.
  • Details of their Merchant Financing product for those business who accept Amex cards.
  • How the payment options work for this product.
  • How the typical customer breaks down for each of the three products.
  • Why a customer would choose American Express over other options.
  • Why Amex only offers these products to their existing customers today.
  • How they are marketing these products.
  • The American Express view on the health of the small business owner today.
  • Some small business success stories that Gina has encountered.

This episode of the Lend Academy Podcast is sponsored by Nortridge Software: extremely flexible enterprise-grade loan servicing software.

Please read a transcription of our conversation below.


Welcome to the Lend Academy Podcast, Episode No. 146. This is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

This episode of the Lend Academy podcast is sponsored by Nortridge Software, the platform behind some of the largest and most innovative lending companies in fintech. If you’ve gone to LendIt, chances are you’ve seen some of their customers. They chose Nortridge Software because it allowed them to push to market faster, provided the flexibility that other platforms don’t and enabled them to go from startup to IPO. Learn more at

Peter Renton: Today on the show, we are talking small business financing. I’m delighted to welcome Gina Taylor, she is the General Manager of Global Commercial Financing at American Express. Now everyone knows American Express, their credit cards are ubiquitous. What people may not know is that they are building a complete suite of financing products for small business owners that go way beyond just the credit card.

So I wanted to get Gina on the show to talk about the different options which we go into in some depth. We talk about how they approach underwriting, how they market these products and we delve into each of the different kinds of products that American Express offers today. We also talk about the competitive landscape and we talk about the state of the small business owner. It was a fascinating interview, hope you enjoy the show!

Welcome to the podcast, Gina!

Gina Taylor: Thank you, thrilled to be here.

Peter: Great, so I like to get these things started by giving the listeners a little bit of background about yourself, what you’ve done in your career, both before you got to American Express and at American Express.

Gina: Great, I’ve actually been with American Express for about 20 years. Prior to that, I did spend a year working at Signet Bank; Signet Bank had spun off CapOne many years ago, but most of my career really has been with American Express. With American Express, I focused on a few different areas over my time, I have led customer acquisition, I’ve worked in risk management for half of my career and I have been in product management and in strategy roles so those are the areas. From a lending perspective, I’ve had a chance to work on lending and lead lending functions, whether that was in acquisition or in risk management or now in product management.

Peter: Okay, so why don’t we just go through and tell us a little bit about your role today at American Express.

Gina: Sure, so I am leading the Global Commercial Financing Division within Global Commercial Services at American Express. Our objective and focus is really on serving small and mid-sized customers working capital and financing needs so we aspire to be a leading provider in working capital for the SME segment in the US and actually, frankly, globally.

When I think about it, we currently provide a suite of solutions that start meeting those needs and they are in three categories. We have under me the card lending so traditional credit card, we have term loans and we’ll talk about that I’m sure shortly with the business loans and merchant financing product and we also have invoice financing and we launched in 2016, working capital term. And so we’re really trying to be here to support small businesses that have a desire to manage their cash flow, desire to grow or even consolidate debt with this broad set of financing solutions.

Peter: Okay, so I do want to get into those different options here in a little bit, but before I do that…because, you know,  American Express has obviously made their name through the credit card business, how long have these other types of offerings been available?

Gina: Yeah, so that’s a great question. So merchant financing, we launched that in 2011; working capital term, we launched in 2016 and business loans, we launched last year in 2017. So we have a long heritage though serving small business for the last 25 years, but that’s mostly been, as you noted, on the card side.

Peter: Right, right, okay and most of us are all pretty familiar with the different card offerings you guys have, we’re not going to focus on that today. I firstly want to delve into the business loan product that you have because some people don’t even know that this is available so why don’t you tell us a little bit about the loan terms of the product, the interest rate, the loan size, that sort of thing?

Gina: Sure, so we had a desire to launch a product that we could offer to our business card members that was a loan solution that could be fast, easy and competitively priced. So we were really trying to solve that need for access to capital with small dollar loans which we believe that there wasn’t anyone that was exactly positioned to compete directly against us in that offering.

So for the larger banks, it’s a lot of work to focus on small dollar loans and the process is typically a longer process to apply. And then for the alternative or online lenders, they do offer small dollar loans to businesses, but oftentimes at a higher rate than what we might want to offer so what we were trying to do is create a solution.

Right now, it’s a pre-approved offering to our eligible business card members and they can apply for loans that range from $3,500 up to $50,000 and with that we have competitive rates as low as 6.98% APR and there’s a range up to about 19.97% APR. And so customers can also…this is online, it’s a digital offering, they can go, if they are eligible to apply, to select the duration of the loan and so they have an offering of one, two or three years.

So that’s the current solution and it’s really meant to serve the need of a small business that has that need to access capital, either for debt consolidation or for small purchase for strategic investment, maybe to invest in growing or renovating their kitchen, something along those lines so that’s really the objective there.

Peter: Right, right, that makes sense. So I’m thinking about the competitive landscape here a little bit. OnDeck and Kabbage who I’m sure you know very well, Square, these are companies that really have…particularly in the case of OnDeck and Kabbage, for many, many years have been offering these online loans for small businesses, as you say maybe at higher rates than what you guys charge, but I’m curious to know, what have you learned from studying the leaders in the online lending space?

Gina: Yeah, we certainly have observed them over the years and we do appreciate the seamless application process, we appreciate the attempt to bring in many sources of data, to integrate that into the decision making and, you know, we appreciate the desire to serve a core need of a small business.

And so with that, we’ve tried to (inaudible) position American Express to offer a competitive solution to our small business card members and so we try to use our internal data as well as any external data to look at pre-approving and making it a very simple process for our business card members to apply, very much like what others may admire from some of the online lenders so that’s really what we’ve looked at.

Peter: Okay, so I presume then you have a quick decision making process because that’s what these other companies have sort of built their businesses on is that you don’t have to wait, you don’t have to put all of your information and wait for a week. I mean, a lot of these companies now offer instant sort of credit decisions. Is that the case at American Express? If so, then how are you able to do that and what sort of underwriting technology are you using to achieve that?

Gina:  Yes, it’s a great question. We are able to provide the decision if you’re eligible to apply within 60 seconds and we analyze, as I mentioned, all of the internal data, every transaction that you’ve had with us. We use the information about your behavior, your spend as well as any bureau behavior that we can pull in to be able to really think through what the optimal loan amount is. We want to make sure that we are offering responsible lending to our customers and so we are really trying to match our understanding of their need with an offering that is relevant for them using all of our real time underwriting data and models.

Peter: Okay, so I know you’ve got other things here, I want to get to some of the other offerings here. You’ve got Working Capital Terms I think it’s called and that’s I believe your invoice financing offering, can you tell us a little bit about that and why you decided to launch that particular segment?

Gina: Sure, so we did launch Working Capital Terms which is payables or invoice financing for our business card members. We launched that in 2016 and we really thought through what a core need was as we were trying to understand how we can support the small businesses we serve and how they use, frankly, our card products today.

We understood that sometimes there was a need to extend payment on some of our core card products and so were looking and really spending time understanding the insight. And it was really around the inflow and outflow of cash and the cash conversion cycle and we identified that for many industries we could offer a solution where we can help those businesses, our card members, by paying the vendor immediately and then withdrawing from the bank account of our card members 30, 60 or 90 days later so really providing that financing. But it’s a combination, it’s both payments and financing so we enable the opportunity for this business card member to pay even non-accepting American Express merchants and then to finance that invoice.

Peter: Interesting, and so you said 30, 60, 90 days, can you give us a sense of the rates or what it would cost the small business owner?

Gina: Yeah, so there is a range of rates right now. We do lead with many of our offerings at .5% for 30 days, 1% for 60 days and 1.5% for 90 days, but again, we do look at risk-based pricing, risk-adjusted pricing depending on the particular business card member, but that’s the typical range so you can think of somewhere in the 6 to 12% effective APR range for many of the card members that we’re offering, depending on the risk-adjusted pricing.

Peter: Right.

Gina: So that’s what we offer. The capacity…so the loan amounts range anywhere you can pay a vendor $1,000 or some are eligible up to capacity as high as we promote, up to $750,000 in capacity.

Peter: Wow!

Gina: So that enables…what we really believe why we think we’re uniquely positioned to offer this solution is we’re using our real time information like we do on our charge and credit cards today about that particular business card member and how they’re spending with us and we’re able to underwrite that decision transaction by transaction which is really exciting. And so, yes, so the capacity can be as high as $750,000.

Peter: Okay, so let’s move on to the merchant financing. Obviously, the American Express card is offered by many, many companies, including my company, LendIt. We obviously have a lot of people paying with that. So the merchant financing, I presume is available for those businesses that are offering American Express cards, can you please tell us a little bit about how that works?

Gina: Yeah sure, so the last couple of products, Business loans and working capital terms were really solutions that we’re offering to our business card members. Merchant financing is a solution we offer to American Express accepting merchants so they welcome acceptance of American Express. And so since 2011, we’ve offered this competitive product.

Right now, the terms that we lead with are 6 month, 12 month, or 2-year term products and it’s really designed to fund large business purchases, expenses, maybe to help with debt consolidation, maybe there’s a business renovation that you’re thinking about or a big equipment purchase because the loan amounts range, in this particular product, from as low as $5,000 up to $2 million and it is a flat fixed fee and there’s a range of rates. We do offer competitive pricing as low as about 3.5% fixed fee which is very competitive so if you think about a 6% fee might be a typical fee that a business merchant would be eligible for on a $100,000 loan, they’re paying $6,000.

They have access to those funds immediately and then they are able to pay that off over time as they continue to generate the charge volume, their card receivables. We’re able to deduct that on a daily basis so it’s spread out over the duration of the loan and they get the access to the funds immediately.

Peter: So I just want to be clear, are you deducting it from the small business owner’s bank account or are you deducting it from the merchant revenue that the company is putting on…they’re getting American Express revenue, which one is it?

Gina: So it is both (Peter laughs), so it depends on the particular construct. If they happen to be an American Express proprietary merchant, we present an option to them that we can actually deduct it right from their American Express charge receivables so that’s an option. We also do have the daily debit from ACH, a bank account so yes, we have a variety of options.

What’s exciting about the solution is we have the ability to offer an instant answer in many cases for up to maybe $150,000 loan amount or $250,000 loan amount instantly. But there’s also the opportunity to provide additional data and have a dialogue with our customer service representatives and be able to really talk about what your financing need is and be able to provide higher loan amounts for those particular customers. So it is customized and that’s where I say the actual solution and construct can adjust based on the merchant’s need.

Peter: Right, right, so then you’ve got multiple offerings here and they’re obviously all a little bit different. Is the target customer, you mentioned the card holders, the merchants, I get it, but as far as the typical type customer, how does it break down between the three offerings? Are there groups that really go for more of the merchant financing versus the business loans, how does it break down?

Gina: That’s a great question. So I do like to think about it again back at the beginning to a suite of financing solutions. We’ve got the solutions that enable you to buy and pay over time which are our card [member] solutions. We have financing solutions that are term loans and they can really fit easily side by side with the Working Capital Terms product which is a payables financing solution or invoice financing solution.

So we really try to think about what that business customer need is so speaking about the set of financing solutions, the three that we’ve just talked about. We really try to reflect on that particular businesses need. If they have a growing need, short term need, ultra short term, they have many vendors they are looking to pay, we are very excited to offer working capital term.

If it is a merchant, we have a conversation around merchant financing, what can we do to help you grow your business to fund your growth or help you consolidate debt. If it’s really about fast and easy and simple, lower loan amounts so lower dollar loans then we direct customers to the business loans offering. So we really try to think about what their need is and the problem that they’re trying to solve.

Peter: Right, obviously there’s lots of choices these days, including borrowing from a bank. We’ve obviously had…it sounds like from what you’re doing, even though you are somewhat of a traditional financial institution, you’re trying to do things a little differently than the traditional banks. So I guess why would a small business owner choose to borrow from American Express compared to some of the other options like a bank?

Gina: Yeah, so I hope that we have many more of the customer that I’m going to describe to you right now. We just met with him somewhat recently, we’re trying to really look at our offerings recently and see what customers are taking the solutions and we found a San Francisco market owner, Korean food market owner, and we were excited to find that…you know, he’s been a business card member, he has both our charge card and our credit card for several years. And in the fall, we really started talking about our financing suite, talking about it on our website a little bit more and then also in our direct marketing and having the positioning available and access to these products.

And so what we heard from him is that he was growing his business and he was excited; he’s a merchant, he’s also one of our merchants as well as a supermarket owner. He was growing his business and he was trying to really reflect on different solutions that would help him meet his needs to pay his vendors, to be able to pay maybe non-American Express accepting vendors, to be able to extend payment and finance those payments and then also to invest in some renovation and growth for his business.

So he found all three products to be very valuable; merchant financing to help him expand his business and grow, business loans to invest in a couple of particular things in his store and then for working capital term, he actually uses it to pay on a somewhat regular basis a non- accepting merchant, a specialty food store so that was interesting for us as well to understand how he’s using working capital terms and he does want to finance that as well.

So what I would say is we’re really excited about the solution set and why do we add value. We’re trying to make it simple, we have been serving small businesses for 25 years, we care deeply about them, we spend time really thinking about different initiatives to support the growth of small businesses.

And so we really have thought about coming out of the last recession that the need for access to capital was compressed a bit for small businesses and that’s where the insight came out, especially for merchant storefront owners to create merchant financing and we’ve tried to build upon that with our expanded offer with working capital term and business loans. So we are really here to serve the small business segment in a way that we hope is meaningful for them and by a trusted provider.

Peter: Okay, so then obviously your customer base is very large. I mean, we have multiple American Express cards here at LendIt, we accept American Express so we certainly are…as many other small businesses would as well, part of your customer database, but are you really focused on your existing customers trying to sell them these products? I mean, I don’t know what segment of the population, the business population that doesn’t have any connection with American Express, but I imagine it’s significant. Are you really just focused on your own existing customers versus sort of expanding the pie and offering it to new people?

Gina: Yes, thank you, that’s a great question. At this point in time, we think about this as value added solutions for our business card members and merchants. So we are offering these solutions to eligible American Express customers so that’s our focus at this point. It doesn’t mean that down the line we don’t expand to prospective clients. We just have a very large base of existing customers that we want to first serve and get it right for them so think about the needs that they have and tailor solutions that are most relevant, get their feedback and continue to iterate and build from there.

As I mentioned, we launched in 2011 with our first product coming out of the recession and then we wanted to watch that and grow it and think about the tweaks we needed to make and then from there, more recently, we’ve been adding to the suite. So our job right now and our focus in the immediate term is serving our existing customers.

Peter: Right, right, okay that makes sense. So how are you marketing to these customers? Are you looking at the different…obviously you have masses of data on everybody and are you sort of proactively looking at certain companies that you know would be right for your product and proactively doing it, how are you marketing it?

Gina: Yeah, that’s a great question. So we are really thinking across all of our direct marketing channels. Our objective is to provide the solutions in all of our proprietary channels so that when a small business or a mid-sized business has a need for financing it’s easily accessible, they see it present. In addition to that, we also have a large Field & Account Development organization and so beginning last year we really began to focus on the broader set of solutions, financing solutions, to make that available to our client-managed customers.

So as any of our client managers are having a conversation around another product, they’re also asking…do you have a working capital need, do you have a financing need so that’s the second area that we’ve been focusing on. The third area I would say is we also want to be where customers are interacting so we want to be relevant and we want to be present for our customers and maybe, ultimately, for future partners’ customers.

So we do have a pretty robust partnership strategy that we do spend time trying to cultivate relationships. It might be with third party processors for merchant financing, it may be through the marketplace lenders because we know small businesses when they have a need go to a marketplace to seek out the various options. It may be through a marketplace or an accounting software provider so that is important for us to really forge the right relationships so that we’re there where our customers are interacting and then ultimately, that may lead to an opportunity for us to offer the solutions set to partners’ customers as well, as I mentioned.

Peter: So you’ve obviously got a pretty good view into the state of small business today and you can see the trends in your own data. So how is the small business owner doing? We hear that everyone seems to be pretty optimistic and things are going well, but I’d love to hear from your perspective what is the state of the small business owner today?

Gina: Yeah, so I would say that we do have a lot of data on that, we spend a lot of time understanding internally what is happening with small businesses, we do [inaudible] extensively. So in our 2017 SME Pulse survey, we did find that SMEs are more confident than last year about the overall economic outlook and so many were expecting strong revenue growth. There is also a lot of confidence in the global economy and then confidence in the domestic economy as well. We looked at this across many countries.

We also stay close to our customers by speaking with them regularly and listening to their needs and we hear a lot of optimism and so that’s the state of where we are today. Having said that as well, I am in a lending function, I am leading a lending function so we’re always thinking about recession planning as well.

So while we are focused on growth and transformation and trying to think about the next modification to the product set, the next right increase in loan amount maybe or in competitive pricing to make sure that we’re staying relevant in the market, we’re also spending quite a bit of time thinking through what are the commercial capabilities we need to be ready for in the next economic downturn because now we do have this commercial financing suite or business financing suite that we did not have in the last recession.

So I would say there’s a lot of optimism, we feel optimistic, we are expanding the product set and we’re expanding responsibly who we make eligible within our franchise, but at the same time, we’re also planning for the downside.

Peter: Right, okay, that makes sense. And so we’re almost of time, but you gave us one story earlier. I’m a lifelong entrepreneur, my father was a lifelong entrepreneur, I love small business and I’d like to know…could you share as we close here just some of the small business success stories that you have encountered in recent times?

Gina: That’s great. Well it’s funny that you ask because we try to bring in and invite in our customers regularly to speak to the larger organization here. We truly do try to have a customer first mindset and we had an interesting…I was sitting at the lunch before the panel with many of our customers that are using actively working capital terms or merchant financing or business loans or even our other cards lending products and I was very touched by an individual that focuses on expanding his drapery business and he has used working capital terms to really negotiate vendor terms and really think as he’s looking at the next big purchase, how he can incorporate working capital terms into his decision process and his growth strategy as he’s building out his business.

It’s growing, he needs to buy the raw materials, he then needs to construct it and then he has to sell it to his customers and working capital terms has become a bit embedded in his business operations. I love hearing those stories.

We had also a merchant financing customer, well we had a couple of them, that have used the merchant financing product multiple times. Our renewal rate is high, the merchants love it, we have a great NPS and I was excited to hear from both of them that they were repeat users and their desire is really they think about how they incorporate that as they’re expanding maybe a product line within their business or they’re doing some renovations, how they’re using the merchant financing product.

So funny that you bring it up, we just had six of them in last week here in our office so those are some examples that are exciting and inspiring stories for me.

Peter: Okay, we’ll leave it there on that note. I really appreciate you coming on the show today, Gina.

Gina: Thank you so much.

Peter: Okay, see you.

The real winner here is the small business owner. You know, I’m just impressed by how much access to capital has changed over really the last five years, certainly over the last ten since the financial crisis. There are so many more options today, you know, you’ve got the Kabbages’ and OnDecks’ of the world, you’ve got the Funding Circles’ of the world and obviously you’ve got your bank that is not sort of remaining in a vacuum. Banks realize they have to innovate as well and you’ve got companies like American Express that have recognized an opportunity and have pursued it pretty aggressively.

This suite of products is a pretty extensive suite to cover the needs of the vast majority of small business owners, particularly when you include the credit card offerings. So it’s a win for small business owners for sure, I think this is a different time and I think that we are moving towards a time where every small business owner who deserves credit will be able to get credit. We’re not there yet, but what American Express and others are doing are moving us closer to that reality.

Anyway on that note, I will sign off. I very much appreciate your listening and I’ll catch you next time. Bye.

This episode of the Lend Academy podcast was sponsored by Nortridge Software, the platform behind some of the largest and most innovative lending companies in fintech. If you’ve gone to LendIt, chances are you’ve seen some of their customers. They chose Nortridge Software because it allowed them to push to market faster, provided the flexibility that other platforms don’t and enabled them to go from startup to IPO. Learn more at