According to a new study by NDP Analytics, between 2015 and 2017, small business online loans accounted for $37.7 billion in gross output and helped to create 358,911 jobs.  The Washington based economic research firm also revealed that small business online lending “generated an impressive $12.6 billion in wages in local communities” during that time frame as well.

The study was sponsored by the Electronic Transactions Association (ETA), the Innovative Lending Platform Association (ILPA) and the Small Business Finance Association (SBFA).

In taking a closer look, the NDP study also found that a high percentage of small business borrowers are located in lower income communities.  In fact, according to NDP, nearly one third of online borrowers were located in those areas.  “About 24 percent of these borrowers are companies with less than $100,000 in annual sales, and two-thirds of them have less than $500,000 in annual sales.”

Alternative lending makes sense when you consider the fact that, according to the Department of Commerce’s Minority Business Development Agency, “companies with gross receipts under $500,000, loan rejection rates for minority-owned firms were about three times higher (42 percent), compared to those of non-minority-owned firms (16 percent).”  With such a high chance of rejection, online lending from platforms such as Biz2Credit, Kabbage, Lendio and OnDeck are good options for minorities.  And this is necessary for a business to grow as “on average, for every $1 lent to small businesses, sales of small business borrowers increased by $2.31, creating $3.79 in gross output in local communities across the country.”