By Garnet Capital Advisors - Small Business Lending: Banks, FinTech, or SBA?

Small businesses have always had a harder time securing financing than their larger brethren, but these challenges have grown even worse in recent years.As economic conditions have improved, fledgling firms have been seeking additional capital to invest and expand. While demand for credit from this sector is growing, many banks are reluctant to provide them the financing they need. Regulations have grown increasingly stringent, and banks have become more risk-averse, implementing stricter underwriting guidelines. In addition, banks are reluctant to incur the costs required to facilitate small business loans. While community banks have traditionally worked with smaller organizations, there are fewer of them around that are active commercial lenders.

In response to this situation, alternative lenders have been picking up the slack and providing smaller firms the funding they need, and the speed they desire. These FinTech companies take a whole new approach to helping borrowers obtain funding, leveraging innovative models and technology to meet borrowers needs and connect investors with lending opportunities.