The report focuses on strengths, weaknesses and projections of the online small business lending industry.
Online direct small business lender Dealstruck and online small business lending marketplace Lendio have announced the release of a joint eBook that analyses the dynamics of the online small business lending space.
The report, titled "Small Business Lending in the Digital Age," offers some useful highlights on the strengths, the weaknesses and the future of the market of “smaller loans” - where smaller indicates loans of less than $250,000 in size. Dealstruck and Lendio argue that since 2008, banks have shifted focus from small business loans to those in excess of $1 million and have created a credit gap of $550 billion. Online lenders have stepped up to the plate to fill that gap.
The report touches also upon the state of the performance of the business lenders. According to both platforms, investor expectations are not always in line with the reality of online marketplaces, meaning that there is a disconnect between investor understanding of the industry and the reality of online platforms. Many investors are only now starting to understand the complexities of alternative online lending and stock valuation will continue to shift, as the learning process continues.
The eBook presents the examples of OnDeck and Lending Club. Despite early investor enthusiasm, the two stocks have been underperforming in relation to the market – as the graph below shows-, creating a growing concern for these big players in the industry.
The reason for this price drop seems to be linked to a misperception of the implied valuations of the two online businesses. The report focuses also on other crucial issues, including regulation and the long-term prospects of the space.
Founded in 2013, Dealstruck aims to provide small businesses with flexible and affordable financing options. Only last April, the firm announced the completion of $50 million in cumulative loans. After just seven months, it has doubled that figure, demonstrating its high growth potential.
Ethan Senturia, CEO of Dealstruck, commented:
"Small businesses are the backbone of the U.S. economy, but the past decade has proven to be a difficult landscape for small business financing. We created this eBook to help shed some light on why banks have shied away from smaller loans in recent years, and to show how the online industry has grown to fill the gap."
Lendio, a small business lending marketplace, facilitates over 100,000 small business loans each year. The company sells leads and information about potential borrowers to lenders instead of making loans itself. It doesn’t just refer companies to alternative finance platforms but to whatever option is right for the company.
Brock Blake, CEO of Lendio, added:
"This eBook is designed to offer a better understanding of what small business financing looks like in today's market for both finance industry professionals and small business owners alike. We were pleased to partner with Dealstruck to provide an overview of the trends in the online lending industry."
If you want to discover more about the online small business lending industry in the US, you may download your copy of the eBook here.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.