The Need for Alternative SMB Lenders
Since the recession, over 700 community banks have closed or merged into other financial intuitions. The number is staggering considering that there were 1,400 community banks before the recession. These failures simply took away many of the options small businesses relied upon for financing. To make matters worse for small businesses, bank lending regulations required the banks that made it through the recession to retreat to more conservative underwriting. Moreover, the new capital requirements for banks made it unprofitable or undesirable to underwrite smaller loans.
Enter the alternative SMB lenders. The alternative SMB lenders filled a void in the marketplace by utilizing technology to underwrite smaller loans profitably and developing underwriting methodologies that rely more heavily on the ability to pay rather than the worth of the collateral securing a loan. The alternative lending community has saved many needed business in Main Street America and allowed a greater number of small businesses to grow and flourish in a tight credit market. Alternative lenders are now an integral part of our economy and their importance is increasing exponentially.