Current Trends in Small Business Lending

Business environments are probably as dynamic as Mother Nature. Something that seems normal and stable today, might turn as a thing of the past in days, month, years or decades and the probability of people predicting anything accurately each time, is almost as good as it would be just by chance.

What indicates something that is important to focus on and understand in any present scenario, is likely to be a trend. Trends are temporary in nature, but can last for days, seasons, years and even decades. This applies for almost all industries and businesses and the business of small business lending is no different. These trends affect both lenders and borrowers, which means that as a business owner/stakeholder who may consider funding, it would be a good idea to understand some current trends that relate to it.

In this article, we shall discuss a five key trends that are impacting the small business lending market keeping in mind not that the ongoing pandemic but also what the future seems to hold in store and various other factors.

Trend 1. SBA Loans are Still Easy but the Pandemic did Reduce Approvals

Ever since the concept of SBA loans was put into practice, lenders and borrowers of such loans have seen great value in it. Yes, qualifying for one was never a sure shot, but approval rates have been good by large and the deals tend to remain attractive for businesses that can qualify.

However, certain trustable sources indicate that off late, there has been a slight fall in the approval rate of loans that are being applied for. This is understandable given that risk in lending is on the higher side these days for most industries.

 Trend 2. Non-Bank Alternative Lenders have increased and Competition is rising

Non-bank alternative lending is playing an increasingly important role in the market by not just opening up opportunities for a much larger set of potential borrowers but also influencing the way the traditional lending system operates. With enhanced services that are easier to deal with, these loans tend to be expensive versus most other options. However, there is more competition now and this is allowing borrowers to get better deals. This ought to be an advantage for borrowers who prefer such loans or qualify for just these loans for various reasons.

A brief online application form is all that it takes to initiate a loan query from us BusinessCapitalUSA. We are providing competitive deals to small businesses and shall be happy to serve you.

Trend 3. Traditional Lenders are Strengthening Risk Assessment Processes

A natural reaction by the banking system during times of elevated risk, is to strengthen control over risk in lending. It is an important step for ensuring economic stability. Traditional lenders have been advised to strengthen their risk assessment processes until the global economy is out of the danger posed by the ongoing global pandemic.

This trend has played a role in moving some demand towards other forms of lending which were already seeing a rise.

Trend 4. Mobile or On-the-go Lending didn’t pick up well

A trend that went against the majority of expert opinion, is that of mobile or on-the-go lending. It was forecasted by the vast majority to pick up well. It had started to, but if recent times are to be considered a good indication, things didn’t go as most people estimated. The market share rose and fell. The fall didn’t exactly come with the pandemic as just weeks before the news started spreading, the market share of mobile lending in both personal and small business loans reportedly lost share. This trend carried on into the pandemic days too.

Trend 5. Cash Flow Still Remains Absolutely Vital

We have published articles about the importance of cash flow in businesses. Liquidity and availability of funds to circulate cannot fully be replaced by any other forms of assets and investments. Tough times and times of increased dynamism exaggerate the need the healthy cash flow and liquidity in businesses. The recent times have seen many businesses get devastated simply because of the absence of such readiness while many other businesses don’t just seems to sail through but also seem to grow thanks to well managed cash flow.

Borrowing remains a significant source of capital for liquidity in times of turmoil for many small businesses in the US. We at BusinessCapitalUSA provide loans for all purposes that a business may need to borrow money for, after just a few simple checks and verifications. We welcome you to fill out our brief application form to get in touch with us.