Members of the FinTech world may be well-aware of the alternative small business lending explosion. But, according to SME lending platforms Dealstruck and Lendio, a significant knowledge gap remains for small businesses struggling to find working capital.
The two businesses recently teamed up to release an eBook, “Small Business Lending in the Digital Age,” in an effort to outline for small business owners exactly what’s going on with the lending sector and how they can take advantage of new services when a bank falls short.
“We created this eBook to help shed some light on why banks have shied away from smaller loans in recent years,” said Dealstruck CEO Ethan Senturia in a statement at the eBook’s release, “and to show how the online industry has grown to fill the gap.”
The eBook throws out some pretty startling figures about the small business lending sector. Namely, that traditional banks are more interested today in providing loans in excess of $1 million, yet the majority of SMEs are looking to borrow $250,000 or less.
That disconnect has generated a $550 billion gap in small business lending in the U.S., the companies said. And while alternative lenders have rushed in to fill that gap, the number of players and the types of loans they can offer small businesses can be dizzying. On top of that, the industry has developed without much regulation, and policymakers are just beginning to eye the sector, which could further complicate its development.