The Payroll Blog
News, tips, and advice for small business owners
With the biggest banks in the United States cutting back on small business lending, alternative lenders are attracting more borrowers than ever before.
According to The Wall Street Journal, citing an analysis of the banks' federal regulatory filings, "10 of the largest banks issuing small loans to business lent $44.7 billion in 2014."
While that sounds like a lot of money (and it is), it is actually a 38% decrease when compared to $72.5 billion in 2006.
At SurePayroll, we have been tracking the growth of alternative lending for more than a year.
Benefits of Alternative Lenders
With this decrease in loan activity from the banks, alternative lenders have carved out a niche. Despite significantly higher interest rates, small businesses are attracted to these lenders for several reasons:
In a recent survey of small business owners, we dug up the following data on how they feel about this new method of acquiring capital:
Drawbacks of Alternative Lenders
Even with the benefits detailed above, small businesses should be aware of the potential problems associated with alternative lending. These include but are not limited to:
If traditional lenders continue to cut back on small business lending, it is only natural for alternative lenders to pick up the slack.