The Benefits of Better Technology for Small Business Financing
February 23, 2022
February 23, 2022
Small business borrowing and financing was stuck in a rut for a long time. But all that is changing. It has now become one of the most dynamic sectors of the financial services industry.
Lenders today are working hard to improve the borrowing experience for small business owners. As in many aspects of life, tech is making the difference. And like most industries, use of tech increased because people started conducting more business online during the pandemic.
Here are some fintech company trends you need to know about that are making the borrowing experience better, faster, and easier for small business owners, whether theyâ€™re getting a loan to improve cash flow, fund a startup, get cash advances, for business growth, or to access a line of credit.
Artificial intelligence is a wide-ranging branch of computer science focused on building smart machines and leveraging machine learning so computers can perform tasks that typically require human intelligence to do.
Some everyday examples of AI that everyone knows and understands include:
AI is also being leveraged in small business lending in ways that you may not be aware of. Itâ€™s being used to:
Artificial Intelligence is a game-changer for small business loan providers. Itâ€™s allowing them to serve their clients better.
Loan providers are great at what they do, but they canâ€™t do everything. In most cases, they provide better loan terms and customer service experiences than traditional banks and other financial institutions.
The issue: While most small business owners prefer to take out loans from companies that specialize in them, they often donâ€™t because theyâ€™re already dealing with so many finance-related businesses, including banks, payment providers, credit card companies, accountants, financial advisors, insurers, tax preparers and more. They just canâ€™t imagine adding another provider.
The reality: Advances in fintech are making it easy for small business owners to connect their accounts from multiple financial firms all in one place. Quicken is an example of a company that offers a suite of tools that makes this possible. This is allowing business owners to work with the best financial service companies across all specializations, including lenders, in a convenient way.
Tip: Your accountant, bookkeeper, or tax expert can help you select the best financial optimization or accounting software for your business. Donâ€™t rely on one from your bank or other financial service providers because it will likely favor their own products and services, which may or may not be competitive. Instead, seek out one thatâ€™s neutral and able to be used with a broad array of products and providers.
Just a few short years ago, getting a small business loan, even online, was a cumbersome process. Because of it, small business owners often gave up on loan shopping and took the first loan deal offered to them. In recent years, online loan providers have made getting loan offers easier. Itâ€™s possible for some to present you with multiple options on a single screen. Others will scan through multiple offers from different loan companies to serve up the best one for you. If you prefer to do things on your own, itâ€™s relatively easy and inexpensive to submit applications to multiple lenders yourself and compare them to find the best offer.
From completing an application online to getting it approved to making payments to closing it out, the best loan companies are transforming the borrowing experience into a single seamless process. What used to be a complex and challenging task for small business owners has now become one thatâ€™s as simple as anything else they do online.
Of course, small business owners still have to input and submit a significant amount of information to apply for a loan. However, itâ€™s less than it used to be. Thatâ€™s because so much information about applicants can be found online. This has also made the application verification process much faster. Humans donâ€™t have to be involved in reviewing information submitted on applications. It can be checked virtually. This has sped up the loan application and approval process from days and weeks to hours or almost instantly. In some cases, loan money can be deposited into a bank account, Paypal account, or onto a debit card on the same day.
If you feel uncomfortable about turning over so much of the loan application and approval process to machines, rest assured knowing reputable loan providers make it easy to consult with a loan expert or challenge anything thatâ€™s incorrect if youâ€™re not approved for a loan.
The small business lending industry has an unfortunate legacy of providing inadequate financing to women, minorities, or people who live or own businesses in disadvantaged areas. Traditional loan providers just didnâ€™t â€śgo there.â€ť
Today, itâ€™s easy for minorities and people in disadvantaged communities to connect online with loan providers that want to serve them. This has dramatically opened the door to small business financing and ownership to many more budding entrepreneurs.
Just a few years ago, small businesses knew little about the organizations they were considering getting loans from. Today, itâ€™s easy to access information about loan providers from rating services or by checking online ratings and reviews. Itâ€™s now possible for small business owners to quickly figure out whether a provider is legit and if theyâ€™ll have a good experience with them.
Many small business owners gave up on getting loans because they got â€śstuckâ€ť in the application process. Or they had questions they couldnâ€™t get answers to when they needed them. Virtual assistants, chatbots, and instant messaging have changed all that. Some people dislike dealing with chatbots; however, theyâ€™ve had a big and positive impact on the small business lending industry. Now, borrowers who need help and support can get it in real-time from a live person or well programmed virtual assistant. Small business owners who need cash no longer have to feel insecure while going through the borrowing process.
On the one hand, the move to digital-based lending exposed borrowers to risks related to cybersecurity and theft of personal information. However, the industry rapidly responded by using technology to shut the door to those risks. Protocols have been put in place that protect client data against hackers. Today, small business owners can rest assured knowing their business and personal finances that they share with lenders are protected.
In the past, most borrowers had no idea why their loan applications were approved or rejected. Much of the process was controlled by humans and highly subjective. Todayâ€™s technology can provide reporting back to borrowers that explain the factors involved in loan decisions. While it can be disappointing to be rejected for a loan, knowing why gives small business owners the power to correct issues with their business so they can get approved or to find lenders that might be open to lending to businesses like theirs.
Small business owners can feel more confident than ever about getting business financing. Tech is making every aspect of the process better than ever.
Did you know: Biz2Credit is known as a leader in leveraging technology to make the borrowing process easier and more effective? Our online application process is one of the best in the industry. If you need financing, you can apply for it through Biz2Credit.
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