With the rise of alternative business lenders, small business owners have never had so many types of lenders available to provide capital for growth. Aspiring entrepreneurs have always looked to family and friends to help finance new and growing businesses or have found investors for equity financing. Local banks, naturally, have long been a primary source of small business loans.
About 10 years ago, online platforms such as Biz2Credit and other online, alternative business lenders made multiple sources of funding available to small and medium-sized businesses through the use of technology. Borrowers no longer had to visit multiple banks and fill out mountains of paperwork with little guarantee of success. There was no way for the borrowers to know the approval parameters of lenders.
Digitizing the small business loan application process enabled small business owners to find funding sources they otherwise would have never known about. Little did they realize how many different types of lenders were ready and willing to lend – even during the so-called “credit crunch.” Banks of all sizes, credit unions, alternative lenders, such as factors and cash advance companies. Eventually, institutional lenders including pension funds and family funds got into the game. They have become important players in small business lending.
The August 2017 Biz2Credit (MBL) cap that has not risen above 12.25% of assets. However, credit unions approved 40.3% in August. The figure is a new low for credit unions on Biz2Credit’s index, but they do remain a viable funding source.