A lot happened in 2016 but following the rate hike, two sectors will become more important to small business owners this 2017.
For the past years, many banks have exited the small business lending space because it was not profitable. Some smaller loans just don’t yield sufficient profit margins. However, the rise in rates should push banks to come back to the small lending scene. Small business owners can look forward to banks making a reappearance.
Per an article from Entrepreneur, higher rates can convince banks to take more risks and see better returns. Entrepreneurs also have technology to thank in part as it continues to make waves in the lending industry. Previously, banks were confined to conservative, slow-paced and full of paper transactions. The 21st century made sure technological advancements will make things more efficient. Banks can now enter the small business loan market efficiently, profitability and within regulations.
Technology did not just improve the lending space, it led to the rise of fintech-driven alternative lenders. These lenders have now become one of the driving forces of small lending. Even if they have higher rates than traditional banks, these lenders can create a streamlined process online guaranteeing their success.
Experts believe that the reemergence of the banks in the small lending scene will make the competition even fiercer. The changing market landscape coupled with the continued increase of small businesses are expected to force banks and alternative lenders to come up with ways to meet the demand of the sector.
At Gapcap, we know that one of the best solutions for lenders is to guarantee that businesses needs are addressed. If you are a small business looking to access capital, then we can help you.