Making Small Business Loans As Welcome As Deposits

“The reality for small businesses is that while their deposits are welcome, their credit requests are not with traditional banks’ loans systems.” 

So report the authors of The Fintech Threat to Traditional Banking on January 2^nd of this new year.  Their observation is correct.  While nearly all the 28 million small businesses with 10 employees or less or no employees have checking accounts, most have loans but not traditional bank loans according to the FDIC small business loan survey. 

Nearly 40% of loans to businesses are less than $50k and the process most banks use to underwriting loans are designed for loans $500k not $50k. 

The result is that the thorough and relationship-intensive process for large loans is overkill for a $20k small business loan.  Small businesses find they can get in minutes online a credit card or new fintech loan from Kabbage, PayPal or OnDeck.  So community and regional banks see their deposit relationship customers pass them by for loans and a market work $20 Billion in revenue, an amount equal to 15% of total community bank revenue.

The good news is that digital lending technology allows community banks to safely and soundly underwriting loans in minutes online and win the loan business of their deposit customers.  Just ask Kentucky Bank, Centier or FMB Bank about the digital lending technology they use from R.C. Giltner Services.  The technology provides digital lending for your loans, under your brand, with your underwriting and your control. Or join us for our webinar on January 26th to learn more.