The past three years have been an exciting. I’ve witnessed the rise of the alternative lender, also known as the marketplace lender. In any industry where there is a void, there is an entrepreneur with an idea to fill it. This happened in the last eight years in small business lending. As traditional banks contracted their offerings to small businesses for various reasons, the marketplace lender stepped into this opportunity.
I have the good fortune to talk to banks and marketplace lenders almost daily. In every case, the focus is on expanding their portfolios and reviving the branch banking system. That’s right, reviving. Branch banking is dead, but it is also in the best position to help small businesses.
Not long ago, the average business owner visited their local branch about 29 times per year. Today, it’s less than 3. With all of the banks investment in technology, banking has become easier and you can do it from anywhere. Great for the consumer, terrible for the relationship manager who used to excel at talking to his business clients who visited the branch.
I read an older article last night that annoyed me. The article was “Why Small Businesses Have Trouble Getting Credit.” Of course, I was interested in the subject and always seek to understand the dynamics of small business lending. As a faculty member of LSU’s Graduate School of Banking, I teach Small Business Lending. These types of articles are an important part of my personal growth. But, this article didn’t enhance my understanding of credit, it annoyed me.