Higher Interest Rates: Alternative Business LoansCompetition

The biggest challenge the payments industry has been faced with over the last 9 years is the rising interest rate. Are you a merchant interested in growing your business without difficulty? Where can you find alternative business loans that are both affordable and reliable? Read below and you’ll discover.


Alternative Lending: Alternative Business Loans

In the US, SME lending has been on the rise in recent years. US small-business lending accounts for 700billiondollars and serves over 29 million small businesses. The resent economic growth, growing interest rates, as well as a growing digitization in the lending fielddriven by alternative lenders have served as the main driving force for the growth of SME lending.


Alternative lenders appeared in the industry and promised to open up new doors for thin-file and high-risk businesses. Alternative online lenders became so much popular thanks to their innovative, non-traditional credit decision frameworks.


In fact, alternative online lenders have a relatively better view of the creditworthiness of small businesses. As the Federal Reserve’s study has revealed, approximately 37% of medium and high-credit risk firms often apply to alternative lenders online for business financing.


By the way, if you’re interested in alternative business loans, look for a respectable business funding provider to get the best deal for your company. Only with a reputable alternative lender, you can be sure to enjoy the lowest rates and exceptional business funding options geared to your own business needs.


Higher Interest Rates: Competition in Alternative Lending  

With interest rates being historically low for several years, banks were unwilling to give approval for business loans. According to the Biz2Credit Small Business Lending Index for February 2015, only 21.5% of funding requests could get approved by major banks with $10 billion+ in assets. This means that major banks rejected about 4 out of 5 applications.


According to the managing partner and co-founder of a payment company, if rates continue to grow, chances are there’ll be other places to put money and enjoy better deals. As the professional notes, the competition in the space will get lower.


The founder and managing principal at another payment company says he also expects a reduction in the competition in the field. According to him, alternative lenders offer lower ratesso to be able tohave an opportunity to expand their product base.


According to the managing director of equity research at another company in the space,if funding costs are going higher more quickly than the investors anticipate, there’ll be room forsome dislocation.


When it comes to online lenders, more particularly, those online lenders that’re dependent upon hedge funds for their own financing, theymay feel the hardest hit by rate hikes. As the Wall Street Journal has noted, hedge funds often pay higher interest as compared to the federal funds rate. This means they seek even higher rates from online lenders.


With all this in mind, work only with a real payment expert in the field so to be sure you’re getting the best for your business.

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