18 - 10 - 2018 | |
Over the past seven years, the approval rate of small business loan applications at big banks has almost tripled.
Does that sound like good news? Well, it isn’t.
Back in 2011, only 8.9% of small businesses got a green stamp on their loan application from big banks. Today, that number is 25.9%.
That’s the perfect case of too little, too late. Because a 25.9% approval rate means that 74.1% of loan applications are still declined. And small businesses deserve more. A lot more.
According to Small Business Administration, 99.7% of all US companies are small businesses (with fewer than 500 employees). Forming a significant part of our economy, small businesses are responsible for 63% of new job openings.
Without small businesses, the unemployment rate wouldn’t be a stable 3.9%, and there wouldn’t be 6.9 million job openings.
Small businesses represent growth, innovation and opportunities. It’s a shame banks haven’t taken notice. Luckily, there are others who have.
Enter financial technology (fintech). Over the past decade, fintech companies have revolutionized the world of finance in many, many ways.
Fast and easy global transfers, cryptocurrencies, blockchain, health insurance, and mobile payments are just a few of the amazing new possibilities fintech has to offer.
Small business lending is not an exception.
Fintech lenders like BlueVine promise funding solutions tailored to small business’ needs. BlueVine offers credit lines up to $250k, with rates as low as 4.8%, and a decision made in a business day or even less.
Another way to get funding is invoice factoring (selling your accounts receivable at a discounted price). BlueVine offers this service in the value of up to $5 million, with the flexibility of short-term contracts.
You can choose which accounts to factor, and say goodbye to unpaid invoices. Talk about killing two birds with a stone.
But according to analysts, fintech companies are looking to do even more.
Aren’t you tired of entering your business’ information for each loan application again and again? Endless paperwork is one of the drawbacks of the lending scene, at least if you use traditional banks.
What if there was a fintech app that could help you get a loan? An app where all you need to do is enter your business data once, and presents you with a list of available funding options?
Then, thanks to the integration of each lender to the app, you could just click on an offer you like, notifying the lender of your interest at once.
Serving as your loan application, that click could save you hours of research and paperwork. You’ll go from idea to funding in less than five minutes.
Does that sound too good to be true? Well, in the not-too-distant future, that could very well become reality.
The necessary technology (APIs and cryptography, mostly) is already there. What we need is clear and simple regulation that would enable the creator of such an app to share financial data with lenders.
With such legislation in effect, the development of small businesses wouldn’t be hindered by paperwork and outdated banking systems. Imagine the possibilities.
Finally, small businesses will reach their full potential.
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