Competition continues to grow for lenders, opening the field for lending opportunities for small businesses. It's good news for entrepreneurs trying to grow their businesses this year by expanding facilities, upgrading technology, investing in employee expertise, improving a manufacturing process, or launching a new marketing focus.
According to MiBiz, a Michigan-based finance blog, businesses with a good track record should have an easier time accessing loans in 2016, sharing an optimistic look at the banking climate. As loan options increase for small businesses, banks are taking a "more aggressive lending posture after repairing their balance sheets in the wake of the recession." Great news, right?
Feeling left out?
What if you don't have a good track record? Maybe you only have a few months of business history. Maybe you have yet to show positive sales, or you've made a bad investment and you're trying to dig your way out. Not all small business owners stand at the ready with paperwork and impressive application in hand for a bank loan.
Banks may be more willing to take on more loans, but many are still leery of the smallest, higher-risk business opportunities. Without a detailed business plan, financial statements, and often substantial collateral, banks still withhold loans.
How alternative lending changes the marketplace
The competition from alternative lending has pushed banks to bend more on their lending policies, but it's still difficult to get a traditional loan without good credit and collateral. Offering a range of solutions from a business cash advance, merchant cash advance, or unsecured small business loan, alternative lenders use technology in their favor to make quick lending decisions less information from the borrower.
A combination on online application gathering and eligibility assessment, plus algorithms to pull from third-party sources, they can make quick decisions, partner with lenders, and underwrite loans quickly.
Partnerships becoming more typical
The banks' "aggressive lending posture," noted earlier is positive for both alternative lenders and banks, in that there is more willingness for partnerships to make lending options more viable. A trend toward partnership means the lending industry as a whole recognizes the need for options invest in and further small business, and the opportunity to use alternative means to put a lending deal on the table. More frequently banks are investing in loans originating by online lenders.
So whether your small business has good credit and you're looking for a loan, or you have a weak credit history or bad credit, access to funds is growing. Alternative lending and a growing environment of the partnership between alternative and traditional lenders is opening doors. If you need capital to grow your business, now is a great time to apply, as competition builds and strengthens the lending marketplace