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Data for today’s episode is provided by Mercator Advisory Group’s report – Financing Commercial Trade: The Search for Liquidity.
Nonbank Online Lenders Are a Growing Source of Credit for Small Businesses:
- In 2018, 32% of small businesses that applied for credit did so with an online lender.
- Online lending to small businesses is a growing trend: 2016 – 19%, 2017 – 24%, 2018 – 32%.
- Small businesses have a high rate of approval with online lenders: 82% approved.
- That’s a higher credit approval rate than small businesses get with small banks (71%) or large banks (58%).
- However, small businesses are least satisfied with online lenders: Net satisfaction – 33%.
- That’s a lower satisfaction level than with small banks (73%) or large banks (55%).
- Prior to COVID-19, Mercator estimates that U.S. SME funding was likely in the range of $100 billion.
Mercator Advisory Group’s latest research report, Financing Commercial Trade: The Search for Liquidity, provides a direct view into the latest trends in technology and tools in the trade finance space. Traditional trade finance remains a primary method for managing risk and creating liquidity, especially for international commercial merchandise exports and imports. There are now more methods than ever before to access liquidity and promote both domestic and international flows of goods and services.
“One of the interesting things we discovered during discussions with industry participants has been a marked uptick in the recognition of working capital management effectiveness, particularly as the coronavirus sledgehammer policies hit businesses,” commented Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service, author of the report, “so expectations for the adoption of these and other digital solutions have greatly increased.”