Nov 19, 2013 Sean Albert
The small business lending market has experienced extreme turbulence throughout the past five years, as the Great Recession led to one of the heaviest credit crunches in recent decades. Accessibility of credit has continued to be a pressure point for the United States economy, as more recent issues such as the government shutdown have continued to hinder loan disbursement volumes.
However, alternative lenders have stepped up almost every time they needed to support small business owners through these economic hardships.
American Banker recently reported that the Government Shutdown caused a massive drop in traditional small business lending, as financial institutions were concerned about the road ahead and less likely to approve entrepreneurial applicants. Additionally, the shutdown essentially buckled the U.S. Small Business Administration, which backs thousands of loans each day.
According to the news provider, the majority of larger banks, smaller financial institutions and credit unions lowered their approval rates and disbursement volumes for entrepreneurs in October. On the other hand, though, alternative financial services providers experienced a massive jump in demand, and simultaneously increased their approval rates in the process.
The source added that one study from Biz2Credit revealed that small business lending approval rates rose by more than 4 percent among alternative financial services providers.
Access to capital is one of the most commonly cited needs of the average small business owner, and alternative lenders have helped to pull the sector out of relatively difficult times by enabling more fluid application processes and higher approval rates. Entrepreneurs should always ensure that they are considering all options when applying for small business loan programs.
Although each type of loan product comes with its own unique benefits and disadvantages, entrepreneurs can access highly customizable options through alternative financial services.