Press Release - Why Small Businesses Embrace Alternative Lenders and What Banks Can Do About It

Banks should recognize alternative lenders’ growing success with small businesses and decide what to do about it.

Boston, March 3, 2016 - Alternative lenders have made inroads into U.S. small-business lending in recent years, doubling their outstanding portfolio balances every year since the mid-2000s. These disrupters, new since the Great Recession and unburdened by regulation, use new algorithms and alternative data sets to book more loans faster and take on more risk than their traditional bank rivals. The U.S. Treasury estimates that online alternative lenders originated US$5 billion in small-business loans in 2014. While this represents only a small percentage of total small-business loans outstanding, it is important for banks to recognize the growing success of these lenders … and decide what to do about it.

“Despite the low penetration to date, the threat of alternative lenders should not be ignored, especially given the high percentage of businesses likely to use one in the future,” warns Christine Barry, research director of Boston-based financial research and advisory firm Aite Group. “Twenty-six percent of businesses surveyed state they probably or definitely will consider using an alternative lender the next time they need credit.”

Aite Group’s latest report, Why Small Businesses Embrace Alternative Lenders and What Banks Can Do About It, assesses the appeal of alternative lenders and provides antidotes for traditional lenders.

About Aite Group 

Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group’s analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends.​ For more information, visit us on the web and connect with us on Twitter and LinkedIn.

To request a press version of this report or to schedule an interview, please contact:
​Jennifer Molgano
Marketing and PR Associate
Aite Group

[email protected]

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