Small Business Lending Trends

Corporate Business Solutions has helped many business leaders find their unique path to success. From cost control to accounting, to restructuring and implementing new procedures, these business consultants realize that no two businesses are identical in goals and needs. 

In today’s market, many owners of small and medium – size businesses are turning to small business loans for assistance in developing their brand.  If you are considering a business loan, here are some trends to understand:

1. Non-traditional online lending: The online lending sector of the financial technology (fintech) industry exploded last year and shows no signs of slowing down this year. These lenders attract entrepreneurs by offering faster, more streamlined application processes than traditional banks. However, these online lenders aren’t regulated the same way as banks, and you need to read the fine print carefully to fully understand what the financial implications are for your business before making a decision. Generally, these lenders focus on merchant cash advances (with a payment arrangement that takes weekly or even daily payments from your incoming cash) or working capital loans with repayment front loaded into the first few months of the loan term. Their terms may be unclearly stated, and unsophisticated borrowers can find themselves on the hook for as much as 30 to 80 percent in rates and fees.  Exercise an abundance of caution with any non-traditional lending source, know the terms and determine the true cost of borrowing.
2. Banks will edge back into small business lending- Last year, 79 percent of SBA loans were greater than $350,000, and most big banks would only consider applications from businesses with a minimum two-year financial track record. In 2017, thanks in part to the market threat presented by the booming fintech industry, traditional banks will ease back into lower-dollar lending and will explore alternative funding options. Since the SBA only guarantees loans through traditional banks, anything those banks do to open up to smaller businesses is good news for everyone.
3. Watch SBA Rates - But do your math, and keep a close eye on the Fed. SBA loans are variable and reset quarterly: with a volatile worldwide stock market and potentially rising interest rates on the horizon, these loans will become more expensive in the future than in the past 5–7 years.

To learn more about us and / or to schedule your complimentary appointment with the business experts at Corporate Business Solutions, call us at 877-357-9366.