As we kick off 2018, we wanted to reflect on the outlook for Small Business Lending as we see it, based on our own experience as well as the thoughts of others scattered in articles around the web. Since the Great Recession, the SMB lending environment has been improving in fits and starts with banks but Alternative Lenders are still filling in where banks are unwilling to lend.
Furthering the growth of business borrowing outside of the traditional banking sector is the speed and affordability that Alternative Lenders have pioneered. Rates are more affordable given the rise in the number of these lenders as well as the new sources of capital looking to find lenders that can attract and process SMB loans. While banks will continue to increase their loan portfolios, it is still a tricky and time-consuming process where many companies will find the Alternative Lenders a better option.
We also see a focus on relationship building and the experience that borrowers have with an Alternative Lender vs a traditional bank as being a continued impetus for growth among companies like Payplant. Lending as a bridge to bankability or as an extra source of needed working capital when a bank will not increase credit as needed will also continue to grow due to this hesitance by larger banks in the space.