An article in the WSJ sites some interesting stats on SMB lending from the 10 largest banks in the US. The amount of funds lent out was down 38% from its peak in 2006, which is roughly the beginning of The Great Recession. This is not new information but what is interesting is the continued growth of non-banking entities that have “opened the door” to alternative lenders and private loans, which have improved access to credit as well as the speed in which loans get approved and funded. Small businesses in the US account for over half of the private work force so this new ecosystem of alternative lenders has allowed for continued job maintenance and creation while the big banks sit on the sidelines. The banks have instituted tighter lending standards along with higher costs, which has “put a lid on small business borrowing in the past seven years, even as other types of financing—home mortgages, auto loans and corporate finance—have rebounded from the financial crisis.”
It seems counter-intuitive that the banks would go back to pre-crisis levels on mortgage origination and lending while simultaneously sitting out the recovery in American Small Businesses but this has created an opportunity for the alternative lending space to step in and set the tone on technology and process improvement to help the SMB universe continue to recover after the financial crisis.
Payplant provides growth financing for entrepreneurs, by entrepreneurs. Its Pay Me NowTM digital invoice-financing service provides cash to businesses when their customers pay too slowly. Payplant helps businesses with PO and Invoice Financing, Asset Based Lending, Term Loans and Customer Financing products. Payplant works with companies that don’t currently qualify for traditional bank financing, have grown too quickly for their current lender or are at the point in their evolution where an influx of working capital can elevate their business to achieve rapid growth. Payplant delivers fast and reliable funding, at very attractive rates and is completely on demand. For more information, visit www.payplant.com.