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Last month OnDeck announced that the company had surpassed “$10 billion in total loans originated to small businesses”, becoming the first non-bank online lender to do so.  OnDeck is a Financial Technology (FinTech) company that offers small business loans through its digital platform.  The achievement came after only 11 years in business, with the majority of the company’s lending occurring in the last few years “with the company originating $2.1 billion of loans in 2017 alone.”

Since the 2008-2009 recession, more small businesses are turning to alternative lenders for financing options.  According to the Small Business Credit Survey from the Federal Reserve, in 2017 “24 percent of small businesses seeking credit applied online, up from 21 percent the previous year. Not only did the total number of loan applications to online lenders increase in 2017, but satisfaction rates of small businesses soared almost 50 percent year-over-year.”

Not only are more people requesting loans from fintech companies, but they are becoming more satisfied with the process.

The survey also revealed that “54% of small businesses report credit shortfalls” with lower-income communities being disproportionately impacted within this.  “Traditional large banks deny 44% of all small business loan applications and many are steadily exiting the small business credit market.”  While there has been a bit of an increase over the past few years, overall the loan amount to small business from traditional banking is down.

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