Although recent studies suggest that small business loan approval rates at big banks are returning to pre-recession levels, for many small business owners, there are still numerous obstacles associated with obtaining a business loan from a traditional lending company and alternative lending companies are gaining momentum and market share from their larger rivals.
Online lending companies are competing directly with banks and traditional lending institutions. Another report by S&P Global Market Intelligence estimates that 13 key lenders in the segment originated $20.64 billion in loans during the first three quarters of 2016, a 31.6% increase from the same period in 2015.
S&P Global Market Intelligence recently polled 450 small businesses that had taken out a loan in 2016. The research identified the primary reasons the small businesses chose the lenders they did and how they initiated their loan application process. 62 percent of respondents said they chose their lending company based on a prior relationship. 35 percent of respondents said that competitive rates were the primary reason for their decision to work with a particular lender. 27 percent cited flexible terms / repayment options as the deciding factor. 25 percent identified the brand name of the lender and a convenient application process as the reason for their decision. 23 percent said positive online reviews influenced their choice.
Recommendations from someone else were a reason why 21 percent of small business owners chose a particular company. 17 percent of respondents said speed of loan funding was why they went with a lending company. 16 percent said they were offered a larger loan. Finally, 15 percent of respondents surveyed were motivated by a solicitation they received from a lender.
The study underscores the importance of relationships in the lending process and competitive rates. At Imperial Advance, among a variety of small business working capital solutions, we offer business term loans, revenue-based financing, lines of credit and merchant cash advance options to our clients. The business term loan, for example, allows a business owner to leverage up to 250% of their monthly revenue. It is highly unlikely a traditional “big bank” would be able to offer a solution with the same flexibility and speed of funding.
One of the reasons for our success serving our clients is our unique ability to offer the most competitive interest rates on business loans because of the strength of our relationships with multiple lending companies and our unique ability to obtain and evaluate quotes from multiple lenders in order to recommend the best options to our valued clients.