New Study Documents Community Bank Digital Lending Opportunity

The new eBook, Small Business Lending in the Digital Age, was just released and provides further documentation of the booming growth of digital lending, particularly at the expense of banks.  It has similar findings as we present in our Small Business Digital Lending Strategy Book for Community Banks.

Over half of the number of loans for businesses are under $100k, but community banks do not profitably serve this market.  While community banks (banks under $10 Billion) have nearly half of all small business loans defined as loans under $1 million, they have only 1% of business loans $100k and under. And their loans to this segment are down by two-thirds in the last five years!  Yet, the total revenue of loans to businesses under $100k is nearly $20 billion dollars, an amount equal to one sixth of community bank total revenue.

Why are community banks missing this opportunity?  Because their lending processes are not set up to profitably deliver and service loans under $100k which average $15k.  Small business customers have many alternatives that are quicker and simpler to access, from business credit cards to dealer loans.  As a result, community banks find they have great checking deposit relationships with small businesses, but the majority of these small businesses have no lending relationship with the bank but have loans elsewhere.

Today, they can leverage their deposit relationship to capture the small loan revenue profitably using new digital lending technology with sound and proven bank underwriting.  The technology platforms are totally owned, branded and controlled by the bank, but can be installed in a turn-key fashion.  For more information, check our business MinuteLender site.