February 14, 2019

SMB Lending: Marketplaces vs. Banks

During the last 25 years, about 7% to 9% of small businesses close each year on average – slightly less than the number that open – according to LendEDU. Among the reasons small businesses close, access to credit is becoming less of an issue in why a business closes compared to during the Great Recession: only 5% of businesses closed in 2015 because of lack of credit compared to 14% in 2007. The democratization of financing due to the expansion of the types of players and credit product options has its pros and cons but one thing is clear – anyone can lend today. Why? Data. While lending to consumers is straightforward enough in terms of access to massive behavioral and transactional data on a number of platforms of different types – e-commerce, internet companies, social media platforms (Facebook alone tracks 98 personal data points for each of its 2.19…

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