“According to a new study from the Florida Atlantic University College of Business and published by the Small Business Administration,” despite the growth in lending over the past year, small businesses are still not receiving enough capital to grow. A huge reason for this is that “lending by banks to small businesses is down by 40% compared with the levels prior to the 2008 financial crisis.”
Since the mid 2010s, alternative lending sources have helped small businesses meet some lending needs with options such as online fintech lenders, credit unions and small banking institutions. In fact, small institutions have increased their loans of under $1 million more than large banks since the financial crisis making them more attractive in some cases.
According to a Nasdaq article, some of the key ways to help increase small business lending is to better support small banks, make lending attractive for large banks and promote alternative lenders as a more legitimate option for small firms. While this is all well in good, the truth is that the lending environment has changes. Better online lending options must be adopted in order to better service a growing market. The amount of businesses that operated solely online in 2008 is drastically different then today. Increasing online applications and connections are key to establishing better opportunities for small businesses in the lending market. Without a solid online presence no amount of regulation decrease will help.
In addition partnering with flourishing alternative fintech lenders is also key for large banks and can help offset some costs of entry. The opportunity is there for everyone to make money in this, but its up to lenders to connect and offer fair loans and reasonable payment prices.