Nov 07, 2013 Sean Albert
Alternative financial services have become far more popular among small business owners in the past several years, especially considering the harsh effects the recession had on traditional lenders. Although financial institutions are beginning to experience a resurgence, alternative lenders continue to be critical supporters of entrepreneurial growth.
American Banker recently asserted that alternative lenders have effectively filled a void that was left in the credit industry following the economic fallout nearly six years ago. Small business owners felt the sting of the recession more so than other corporate leaders, as banks tended to steer clear of entrepreneurs because they viewed these individuals at higher risk of default.
However, entrepreneurs still needed access to credit to launch their businesses or expand existing operations, despite the adversities of the recession. According to the news provider, local communities, including some in Michigan and Wisconsin, have become heavily reliant on alternative lending programs, while these service providers have helped the associated economies live on.
The source explained that alternative lending has also helped individuals, including unbanked and underbanked households which are often underserved by traditional financial services providers. Reports indicate that the unbanked and underbanked populations are continuing to expand rapidly, and already make up roughly one-fifth of all households in the United States.
As such, alternative financial services providers have filled voids in both the small business community and underserved consumer populations.
Business owners and executives should always work to identify the best loan products available to them, even if this means going outside of the traditional track. Alternative loans can be more advantageous in many situations, depending upon the specific needs of the business or consumer. Additionally, these products often have a shorter time between application and disbursement than traditional channels.