Overall market insecurity drives loan approval rates at large and small banks. Facing wider insecurity because of low oil prices and a turbulent stock market, numbers show a slight decline in loan approvals to small business, according to the Biz2Credit Small Business Lending Indexࡊ.
The drop in lending approval rates from small banks is slight, from 49.1% in December to 49% in January. But with continuing instability, the question of further decline looms.
Additionally, credit unions saw a similar decline, from 42.3% to 42%. Experts note the lack of technology within credit unions to expedite loan applications contributes to their drop in loan approvals. Without the convenience of online applications and speedy loan approvals, customers are seeking other lending choices.
Credit unions will likely change their approach, adapting to technology, thought the move has been slow. Canada's first financial institution to implement online lending options, Northern Credit Union, is offering business accounts with a line of credit online to help small businesses in the Northern economy get a foothold. With 3,000 business members in Ontario, it's a start.
Alternative lenders factor in
"While lending approvals dropped at the mainstream lenders, alternative lenders picked up the slack," said Biz2Credit CEO Rohit Arora. According to the Index, loan approval rates from alternative lenders improved one-tenth of a percent in January to 60.8%.
The benefits associated with alternative lending include
- an easy online application process
- quick assessment based on proprietary algorithms that calculate risk
- an ability to take on greater risk by using a rate factor rather than an APR%
- immediate funding upon approval
- concise payback schedules in smaller increments over time than large lump payments
For example, seeking capital through BizLender, a web-based provider of alternative funding solutions, begins with a quick online application to prequalify. With that information, we're able to research and present a variety of financing options. Once you've reviewed the lending options presented, the funds are delivered to your account within a day or so.
Although business is initiated online, we employ professional and experienced representatives who reach out to you to discuss lending options and explain payback plans.
Have you been turned down for a traditional bank loan in this unstable economic environment? Research alternative lending options that make access to capital possible in a faster amount of time than traditional lending, with less paperwork. As online lending approval rates increase, your opportunity to grow your small business through lending options also increases.