Small business lending marketplace

Lending Marketplaces Are Accelerating America’s Small Businesses

  • May 16th, 2017
  • Melissa Zehner

Small business lending by banks has been declining since the 1990s – and the regulatory squeeze on banks since the 2008 recession has resulted in an even sharper decline in recent years.

So why do people still think that banks are the only places to get small business loans? The Answer is simple: they don’t know any better.

The New Engine of Small Business Lending

While banks have been turning down the majority of small business owners, lending marketplaces have been quietly fueling small companies and mom-and-pop shops across America. In fact, loan origination through lending marketplaces increased a whopping 700% in the years following the recession.

Lending marketplaces aren’t just boosting small businesses, though – they’re also making business owners happier. Almost 80% of small business owners who secured funding through online lending reported satisfaction with both the simpler application process and the shorter wait for a credit decision. Compare that to just half of bank borrowers who report satisfaction and it’s clear that marketplace lending offers a better experience.

Marketplaces Take the Speed Bumps Out of the Lending Process

So why are lending marketplaces booming while banks are bombing? For starters, emerging technologies have helped lending marketplaces streamline the painstaking process of applying for funding with traditional lenders.

Rather than forcing applicants to spend several hours filling out paperwork, lending marketplaces fast-track the application process by using a single online application to match business owners to financing options from a variety of lenders. This saves hours of time and hassle, and it gives business owners unprecedented access to an assortment of loan products.

Approval and funding times are also faster, because lending marketplaces are subject to different regulatory bodies and timelines than banks. Whether it’s a struggling local business that needs funding to keep the lights on or a thriving company bursting at the seams and ready to expand, faster funding is often the difference between a dream and a dream-come-true.

Lending Marketplaces Are Accelerating America's Small Businesses

About the Author

  • Melissa Zehner

Melissa Zehner is a writer and content marketing manager. She’s written for wealth management organizations, venture capital firms, credit unions, and more than 40 small businesses. When she’s not playing wordsmith, you can find her reading, cooking, or hiking with her dog Spencer.

Comments

  1. Great infographic illustrating the vast difference between online and bank lending. I am trying to find the source of the stat saying that 80% of bank applicants get rejected. I wasn’t able to find it in the sources cited. Would you be able to pinpoint for me where that came from? (I work for a CDFI that provides affordable financing options for small businesses that can’t get a bank loan, so this information is very helpful for us!) Thanks!

    • Hi, Jenna. Thanks for checking out our infographic. The statistic you’re interested in originally came from a small business trends survey done by OnDeck, one of our partner lenders. You can find a summary here: https://www.ondeck.com/company/in-the-news/press-releases/ondeck-main-street-pulse-report/ If you have any more questions, just let us know.

  2. Hi Jenna. Thank you for your questions/comments regarding our infographic. I work with our partners here at Lendio and would love to learn more about the CDFI and the types of services you provide small businesses. Here at Lendio, we exclusively work with small businesses and love helping them get the capital they need to grow. We are always looking for influential + trusted partners. Perhaps there may be a fit for us to work together. If you have sometime for a phone call I’d love to chat. You can reach me directly at [email protected] or by phone at 801-815-4118. Thank you, have a great day.

    Nick Dow
    Director of Partnerships
    SLC – Utah