Linking Up: How Small Businesses Find Financing Online
Business Solutions As more and more small businesses adapt to the digital world, they’re beginning to take their lending moves online.
There’s a hunger among entrepreneurs to find financing to get their business off the ground or take the next big step in their expansion plan. They’re looking for term loans, equipment financing, lines of credit, invoice financing, working capital and real estate loans to help them hire and grow.
Ninety percent of small business owners say it’s too hard to access capital, according to Small Business Majority, and many applications are never even filed because of the difficulty of getting an appointment with a loan officer. As a result, many are seeking out online lenders.
"This is what good government is all about: acting as a virtual public square where Americans can convene to make our economy stronger."
A Federal Reserve Bank survey found that 1 in 5 small businesses seeking credit in 2013 applied with an online lender. Entrepreneurs have shown they’re willing to pay exponentially higher interest rates for the convenience of faster processing and less paperwork. The adage is true: In business, time is money.
But higher rates mean less capital for inventory, equipment and wages. What if there was a way for small business owners to get both lower interest rates and faster loan approvals without leaving their laptops?
Finding a lender
Online middlemen that pair lenders with borrowers now comprise a multibillion-dollar industry, and small business lending is the newest frontier for these matchmaking services. The U.S. Small Business Administration (SBA), the government agency that supports more than $20 billion in small business lending annually, recently decided to meet these entrepreneurs where they are.
In February, SBA rolled out LINC. It’s the first time the federal government has used online matchmaking to help Americans get a ‘date’ with a lender. Borrowers provide some basic information about their business and the loan they’re seeking. When they hit the send button, a form is routed to major lenders from all 50 states that have signed up.
Uncle Sam is virtualizing what happens every day when a borrower walks into a bank to transact business, and we’re providing this service at no cost. If LINC doesn’t produce an immediate match, SBA connects you with a local adviser for loan consulting. This is how technology can help government evolve to solve 21st century problems. This is what good government is all about: acting as a virtual public square where Americans can convene to make our economy stronger.