Technology in the Small Business Lending Space
There is no denying that technology has increased access to an individual, and has opened new doors to success and markets. From mobile banking to the use of automated spreadsheet products, technology is at the forefront of providing cutting-edge ways to engage with both lenders and borrowers. Earlier, a small business owner might be required to go to a bank, or a credit lender in person and talk to the bankers and specialists about why they are special and how their business can help bring more revenues to the lender. Now, technology has bridged the gap between lenders and borrowers and has made seeking small business funding as easy as submitting information and clicking a few buttons. Although it may look simple, technology is a complex subject and it needs careful assessment of how it has made seeking small business loans easier.
The Internet has helped increase the use of mobile banking and fintech as a way to connect borrowers and lenders together. Many lenders have websites and mobile applications that help connect with new customers, providing them information about products and processing their applications as early as possible. Because much of the information is already available through social security numbers, and the initial registration process, a lender cannot just help you process quick loan applications but provide you guidance on tax and business registration matters. All you have to do is apply online, attach important documents and a representative will communicate with you within minutes or the very next day. Online applications reduce the time it needs to process applications and many lenders forward loan amounts within minutes.
Many small business owners use automated spreadsheet products such as QuickBooks, Xero, and SAP to make their financial statements and cash flows. Automated spreadsheets can help a borrower send quick working capital and cash flow reports as requested. With a few datasets, a borrower can prepare budget forecasts and use them to receive small business loans and working capital loans to continue their operations. Automated spreadsheets also provide for future forecasting by seeking parameters that a business owner thinks to suit their industry. If you are preparing a working capital budget, changing inflation and interest rates can provide for a more robust working capital report which will not just help you make timely costing decisions, but helps your lender understand the most appropriate amount for your funding needs.
Big Data Applications
Many lenders have become sophisticated and when a borrower submits their credit score, budget forecasts, working capital needs, and tax information, machine learning algorithms provide for a credit score and business assessment that makes forward business funding easier. Through big data and machine learning, a lender can assess future business potential, interest rates, and the need for a business line of credit that suits the borrower. Many lenders lend the most appropriate amount and provide the best repayment options that their systems provide. This reduces the time to process an application and lowers interest rates that are charged to a borrower.