The small business credit marketplace have been disrupted by the FinTech businesses, establishing technology that’s accelerated the loan-making process and streamlined the lending process. Numerous industries have been updated and brought up to the modern standard because of technological advances, which led to paperwork reduction and applications during “non-banking” hours. Borrowers and lenders, alike, have benefitted from FinTech.
The FinTech revolution has enabled credit unions, banks, and traditional lenders to cautiously make the move toward digitization. Meanwhile, non-bank lenders, who were less cautious, maneuvered their way in their to market share. Tech has made it possible to obtain coast-to-coast regional banks, it has shortened process times, and it has urged interest rates to historic lows.
Since the mid-2000s, the rapidly moving industry has made it so that credit has become more readily available. Small businesses have particularly benefitted, as they’ve gotten the funding they’ve needed. During the same period of time, yield-hungry investors injected themselves into small business credit market. Those investors, who are competitive with banks, offered longer-term products with interest rates. Unfortunately, some firms have gotten greedy and charged exorbitant rates to people those who aren’t necessarily financially secure and may not be creditworthy.
Marketplace realities speak to the rise of FinTech. For instance, millennials are in love with mobile technology –and they’re far more likely to conduct business on tablets and cell phones. Young people expect to experience financial experiences beyond the nine-to-five hours. The public is more likely to opt for transactional experiences that occur, and they’re less likely to want to engage with managers and bank tellers.
Entrepreneurs will continue to seek capital, even in the face of looming interest rate hikes. Higher interest rates are more profitable for conservative lenders, and when lending is profitable, banks will provide capital. Also, at the same time, less scrupulous non-bank lenders won’t be able to continue charging astronomically high rates because reasonable sources will make money far more available. For that reason, entrepreneurship won’t easily depart.
U.S. businesses are getting funded and they’re growing, and lenders are rewarded with the profits invested in the firm. Borrowers are fearless, and they’re gaining funding deals through traditional lenders and FinTech firms, not antiquated banking practices. Costs are lower for borrowers and lenders, made easier by tech. Through FinTech firms and women-owned businesses have benefitted, as well as under-served communities. The financing innovation over the past few years has led to companies being able to thrive because small businesses drive the community with job creation.
David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.com; http://davidemickey.net/; and http://davidemickey.org/.