Loans Knowledge Base

The rate of small business loan approval is quite amazing. In accordance with the Small Business Lending Index, such loan approval has hit all time high in January, 2012. The finding is based on the analysis of loan applications made through Biz2credit which is a meeting point of the prospective borrows and more than 1,100 lenders spread through the USA. Due to the strict criteria of conventional loans, the borrowers are now more attracted to the alternative lending solutions. As a result, the market is a witness to tremendous hike in the small business loans as well as some leverages including merchant advance.

Merchant cash advance lenders along with other alternative lenders including micro-lenders, Community Development Financial Institutions have sanctioned loans for two third of the applicants. Compare this statistics with a meager figure of 47.5% referring to how many out of each 100 applicants are granted loans by the small community banks. And if we drag the big banking units – they have more than $10 billion of assets – into this picture, the figure further dips down to only 11.7%. These facts are highly reliable because they are coming from the horse’s mouth – Biz2credit.

At this point, the alternative finance providing sources can rightly claim that they have done a great job by granting near about 70% loan approval as compared to the slender margin of 12% in case of the banks. So, the merchant cash advance makes a better and safer choice as far as faster approval is concerned as the chance of being rejected is really very slim. Furthermore, a business owner receives a bigger figure with merchant advance against lesser documents and no collateral.

Due to recession, several banks have contracted their business activities over the last few years. That has left a huge vacuum in the marketplace and numerous alternative finance providers have rushed to fill up the blank. The businesses have always been in need of financial help especially during the economic blues. As crisis gripped the economy, the retail sectors and other business groups heavily required some reliable sources of monetary help. The demand gave rise to the prosperity of merchant cash advance companies.

If we follow the market trend and statistics, it will not be tough to realize that majority of lending comes from the alternative sources instead of the mainstream lending companies. This fact may be indirectly forcing the existing banks to take initiatives for extending loans at full fledged. Though pressure is being built up on the banks to lend more and more once again, significant changes are less likely to happen before 2013. Till then, it is high time for the merchant cash providers to secure their strong customers base so that they continue to dominate when the banks will slip into the usual self.