Nov 25, 2013 Sean Albert
Small business lending is one of the more critical aspects of economy growth in the United States, especially as the average entrepreneur will cite accessibility of credit as the most important component of stability. Additionally, the sector is responsible for a disproportionately high rate of gross domestic product and hiring. As such, alternative financial services providers have helped to ensure stability while banks continue to have poor approval rates.
David Kiger, writing for Business 2 Community, recently reported that one study from Pepperdine University's Private Capital Access Index found that 59 percent of entrepreneurs first look to banks when seeking credit. However, the source explained that only 27 percent were successful in this pursuit, and that a much higher rate had to tap into alternative lending channels to access the credit they needed for their small business.
Although alternative lending products come with certain setbacks such as commonly higher rates, these credit opportunities have been a driving force of economic stability in the small business sector. According to the news provider, many alternative financial service providers have been working to create the most preferable and desirable products to experience even stronger growth amid the poor performances of traditional financial institutions.
Kiger cited the opinions of Forbes contributor Ty Kiisel, who stated that alternative lending is not necessarily a gallant and heroic savior of small businesses, but rather an opportunity to access more customizable lending products.
Small business owners should always look at all of the options they have available to them when it comes time to apply for a commercial loan. As traditional loans might not be the best option or could possibly be completely unavailable, alternative financial services can provide entrepreneurs with an opportunity to access the right types of credit programs.