If you can count on one thing in business, it’s that change is inevitable. Business owners old and new alike know firsthand that few things remain stagnant while running their own business – and successful business owners have learned how to roll with the punches. The business lending industry has experienced more change in the past decade than perhaps any other business industry; where once traditional lenders such as banks, credit unions, life-insurance companies and pension funds reigned supreme, a new player has entered the realm: the alternative lender. But we don’t need to tell you that the alternative lender has trumped traditional lenders – that’s a given. We’re more interested in examining how alternative lenders made their steady way to the top.
Before banks became aware of how profitable the loan industry was, there were few methods of obtaining a loan. Sure, you could ask your friends or family for money, or you could plead your case to a local, most likely wealthy businessman. There are obvious drawbacks to both of these options – and seizing the opportunity, banks invented the fractional-reserve banking system. Acting as the middleman, banks were able to successfully aggregate the supply and demand of capital, ensuring that businesses everywhere were capable of accessing funds.
Yet banks weren’t perfect; and they certainly had obstacles to overcome. For many businesses, the prospect of waiting weeks (or sometimes months) to hear back on a loan application was a major drawback. Seizing the opportunity, alternative lenders fused technology into their loan application programs and thus the idea of quick business loans was born – and a new era in business lending began. Businesses suddenly only had to wait a couple of days to hear back on the status of their loan applications, which resulted in an overall improved customer experience. And naturally, as the customer experience improved, so did deal flow – situating alternative lenders at the forefront of the business lending industry.
The global financial crisis of 2008 – as discussed in our last post – was a major factor that influenced the downfall in popularity of traditional lenders. By the time the economy recovered, alternative lenders had already solidified their status as major players in the business lending industry. And if we can attest to anything, it’s the fact that alternative lenders aren’t going anywhere fast. We’re here, and we’ve been filling some pretty big shoes for quite a while now – and will continue to fill the void that traditional lenders have left in their wake.
Learn more about how Gravity Capital can help you fulfill your business lending needs by filling out our easy online application.
