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How These 2 Offbeat Online Lenders Could Help You Land Funding You may not have heard of them, but these less-known online lenders could be your source of startup cash.

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The following excerpt is from Entrepreneur's book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes

If you're investigating online loans, take a look at two of the more unusual (yet legitimate) online lenders, peer-to-peer site Lendio and online pawnbroker Pawngo.

Related: 6 Tips for Navigating Online Lending Options

Matching small businesses with creditors: Lendio

When the economy tanked in 2008, enrollment in Olya Losina's fledgling art school began to wane. Marketing the San Diego-based Losina Art Center to a new crop of students required cash the painter and her husband/business partner, Bill Beatty, didn't have. So in late 2011, they created a profile on Lendio, a free online service that matches small businesses with lenders. Within minutes, they had a customized list of half a dozen potential lenders offering the five-figure, short-term financing they were seeking, and within days, they received the cash they needed.

Lendio CEO and co-founder Brock Blake says 300 U.S. lending institutions and nearly 1,300 individual lenders participate in the automated web platform, from banks and credit unions offering traditional, long-term loans to fast-cash alternative financiers such as peer-to-peer lenders and merchant cash-advance providers. Each month, roughly 10,000 business owners come to the site looking for financing, 60 to 70 percent of whom are approved for a loan, Blake says.

In a conversation with Entrepreneur, Losina sketched out how Lendio and her specific lender, OnDeck, helped keep her art school afloat:

Entrepreneur: Why did you go online for your cash infusion?

Losina: When the economy took a hit, our students pulled back. They just couldn't spend any money, and it left us struggling. We couldn't get ahead enough to do any marketing to expand. We needed to take out a small loan to build the business. The banks didn't want to talk to us; we'd destroyed our personal credit opening the business. We're renting our place, so we don't have equity. What interested us about Lendio is that they didn't look at equity; they looked at the cash flow. And we could show that.

What was it like working with Lendio?

It was a simple process. We filled out a quick questionnaire, and Lendio got us in touch with qualified lenders without us having to research and qualify them ourselves. This definitely helped save us time. We scheduled a follow-up conversation with our Lendio representative, who gave us tips on how to evaluate lenders. Then we spoke to a few of them. And we took time making sure OnDeck was legitimate.

What did OnDeck ask of you?

They weren't looking at our personal credit score; they were looking at our cash flow and whether we'd be able to pay the loan back. The time from when we submitted our loan documents to OnDeck to the time the money showed up in our account was three to four days.

What were your loan repayment terms?

We qualified for $15,000, but we took only $10,000. It was an 86-day loan, paid back on a daily basis. The amount we were paying back was just $127 a day. We were getting a couple of new students a week, so it was a number we could deal with. But coming up with an extra $3,000 a month all in one chunk -- it would have been paralyzing to see a big number like that. The loan ended up costing 10 percent to pay back over those months. It was not a hard decision to make. We used that $10,000 to make more money.

Related: Beating the Odds and Avoiding Failure When Crowdfunding

How did you spend the cash?

We used the money for brochures, a major upgrade to our website and creating videos for the site. In the spring of 2012, we started a program to help students create and put together a winning portfolio to get into art college. One of our students who got into a very competitive college. He came to us with no drawing skills whatsoever. We saw that there was a real market for the portfolio program, so we're continuing to push it as a standalone product. The money we got helped us create that program; now it's 10 percent of our business.

Being on online pawn star: Pawngo

Since the History Channel show, Pawn Stars, first started capturing viewers' attention in 2009, the seedy image of pawnbrokers has gotten a well-needed buffing. Industry veteran Todd Hills hopes Pawngo, his online pawnshop, will help him achieve the same kind of success.

Just like a traditional licensed pawnbroker, Pawngo secures loans against items of value or buys them outright. Once users enter a description of their item, Pawngo's team of experts makes an offer based on estimated resale value. If the user accepts the offer, they provide proof of identity and ship the item to the company's Denver headquarters; once it's received, the money is wired to the user's account.

Hills had been in the pawn industry for more than 25 years, building and selling several shops of his own. He realized that as credit markets dried up during the economic downturn, individuals and businesses were in need of new avenues to access cash.

"We were starting to see people who had never been in a pawnshop before, especially small-business owners who needed loans up to $50,000, and they couldn't get [the money] from their banks so were turning to pawnshops to cover their cash shortages," Hills says.

He decided that taking the concept online would let him reach a much broader audience, without the headaches and geographic constraints of building, staffing and growing a retail pawnshop. He founded his web company in 2007 and launched the original site, InternetPawn, in 2009. That "too literal" name was tossed in favor of Pawngo, which launched in June 2011.

In 2010, Hill's business -- which had already raised $800,000 in funding from Access Venture Partners and Daylight Partners -- caught the eye of Lightbank, the $200 million Chicago investment fund whose partners had already founded four successful internet companies, including Groupon. The Lightbank team ponied up $1.5 million in Series B funding.

Related: 9 Steps to Launching a Successful Crowdfunding Campaign

The company charges interest of 3 to 6 percent, depending on the item and size of the loan. In 2013, Pawngo launched a small-business lending program that can make up to $1 million available in 24 hours with no credit check, based on the resale value of the merchandise. The company requires no principal payments until the end of the loan period.

The company's focus was originally on watches, high-end camera equipment and gold, but its category list has expanded to other precious metals, jewelry, loose diamonds, Apple computers and musical instruments. As it builds its retail sector, Pawngo will also earn the difference between acquisition and resale prices of the items it sells.

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