Nov 08, 2013 Sean Albert
Throughout the past several years, alternative lenders have maintained much higher approval rates than traditional banks and financial institutions. This trend has helped many small business owners get the financing they need to open new businesses or expand upon existing operations despite the financial crisis and long-term effects of "Too Big To Fail."
Small Business Computing recently reported that the alternative financial services sector is continuing to create more advanced methods of data management and analysis to expand options for applicants. Many experts have asserted that smaller banks, credit unions and larger financial institutions have not yet approached new technology with the same aggression as alternative lenders.
This is one of the reasons why approval ratings continue to go up in the alternative lending industry, where firms have to conduct a similar level of risk management to traditional organizations. According to the news provider, big data is the latest technology trend to enter the alternative lending sector, and firms are already beginning to optimize their use of the analytics tools for stronger overall performances.
Big data is essentially defined by the ability to take massive volumes of unstructured information and efficiently convert them into actionable insights. The source explained that alternative lenders are tapping into a more vast pool of data to discover trends, decide upon the viability of a new applicant and much more.
Recent studies have shown that larger financial institutions are starting to increase their approval rates, and that smaller banks have also experienced a resurgence. However, alternative financial services providers are still far ahead of the pack, and small business owners should always weigh all of their options before signing on for a specific loan product.
As economic conditions continue to improve, entrepreneurs will have stronger access to credit through a diversity of channels.