How FinTech Helped Small Business Win
FinTech was born out of technology and a long-time frustration by the lack of efficiency in obtaining financing. At some point, people started wondering how they might streamline the process and FinTech was born. While FinTech is not all about online lending, business owners helped the adoption rate dragging it into mainstream acceptance.
How Small Business Helped FinTech
Business owners groan every time they need financing from their bank. They know the long process of submitting financial paperwork, both personal and business, will take a lot of time and aggravation. They would call their ‘business banker’ from the bank, but banks cycle through those people faster than a McDonald’s drive thru. Business owners navigate through the maze of banking personnel to find the right banker who will do their loan.
The Grass Isn’t Always Greener
On the bank side, they struggle to find qualified business borrowers and spend months chasing down potential customers only to find they do not have a need for financing for some time. Business is all about timing and as a Business Development Officer, good business owners are a needle in a haystack. Unfortunately for them, other banks are vying for the same person and competition is fierce.
When the match is finally made, the business owner explains their situation to the banker and the banker realizes the bank is not focused on that loan type or has hit quota for that loan type to the rates are not favorable. All that work on both sides was futile and disappointing at the wasted effort.
The Phoenix is Reborn
Out of the dust comes alternative online lending. Financing deals faster, with more flexibility. Peer to peer (p2p) lending platforms or more agile non-FDIC insured lenders with tons of money from private investor backing them all leech away business from the banks. There is a service for every need.
Want financing fast to beat out competition? Pay a slightly higher rate and move your business forward.
Want the best rates? Receive them quickly with general lending marketplaces that aggregate different lending sources.
Want favorable terms both bridge or long term? There is a lender for that.
Have an overly complex situation that will take some understanding behind the story? There is a lender for that too.
Most of those answers are not from banks or at the very least, a business owner gets more options than only their bank.
Frustration Breaks the Walls of Loyalty
The Fintech industry has helped expose business owners to new lenders, some banks, some alt lenders or P2P. Ultimately business owners want the loans, if the rates, terms, and amounts are favorable to move their business forward, does it really matter whether the funds come from the bank they make deposits to?
We Are on the Edge of…
Small business is the primary driving force behind a country’s economic success. We have already seen an uptick in the economy for 2017, unemployment is down, jobs are being created, and there is hope in the air. With promised deregulation in the new political climate and easier access to financial capital through multiple lending sources, we are on the verge of a Golden Age for small business.