Merchants can rest assured that the small business funding will continue to improve as mission driven lenders have set to better the services through collaboration and implementation of necessary changes.
Data has shown a major growth in marketplace lending, something that some lenders now consider as proof of a growing market. And they are stepping in to not only provide the required service (small business loans), they are actually working on making it better for consumers (small business borrowers).
Marketplace lending has gone up by more than 700 percent over the last four years. Data from 13 of the largest online lenders show a growth of loan volume to an overwhelming $16 billion in 2014 up from a tiny $2 billion in 2010.
This growth only means that merchants are increasingly seeking credit services. And lenders must no longer just come in to provide it, they must improve it.
A joint research by the Association for Enterprise Opportunity (AEO) and D&B established that 2.2 million small businesses with revenues of below $1M were looking for credit in 2014. These were businesses located in low income neighborhoods.
Yet Community development financial institutions (CDFIs) could only help about 12,000 of these businesses.
This showed a clear gap in the market as banks already virtually vacated the small business loan ecosystem. The small business loan is classified as any amounts of loan below $1M.
As a result, upstart technology-driven creditors have rushed in to plug the gap. They have flooded the market, meaning there is increased access to credit.
Promise of better service
A bunch of players in this small business lending space are considering ways to improve their business models and reduce the costs incurred in customer acquisition. If they manage to reduce these overheads, customers can be assured of improved customer experience; but most importantly, reduced cost of loans.
These alternative lenders are likely to start providing products and services that meet the exacting small business customer needs. That’s a promise of a better future for small business borrowers.
Meanwhile, small businesses are still assured of satisfactory funding from the firstamericanmerchant.com that has already adopted a customer friendly lending method. If a small business loan is part of your considerations then just get in touch with us to help set things in motion.