Article posted on : link to source

With over 30.2 million registered companies in 2018, small and medium-sized businesses make up 99.9% of all US businesses. They’re a powerful driving force of the economy, accounting for 1.9 million net new jobs in 2017 and nearly 50% of total US employment. Their sustained growth is critical to future economic developments. Yet, ironically enough, our banking system is unable to meet their funding needs.

Small businesses have smaller capital needs. Taking into account the risk factor, the long review process and the amount of work needed to be done, small business loans generally don’t pay off in the traditional lending system. As a result, banks largely avoid lending to small businesses, turning their focus to well-established SMBs, bigger commercial loans, and consumer products. On the other hand, small businesses rarely have the capital and the structure needed to carry them through a months-long loan review process, at the end of which they’re likely to be declined.

But these challenges have given way to opportunities, thanks to the advancements in the field of Big Data and Artificial Intelligence. The alternative lending market, driven by financial technology (FinTech) startups, is helping bridge this gap and providing an expanding number of small businesses with …

Read More on Datafloq

%d bloggers like this: