For small business owners, the bumpy ride continues. Not that things aren’t getting better; they are. Or at least, when you take a step back from the monthly assessments of small business optimism, and observe the trend lines over the last couple of years. But It’s the up and down, uneven nature of the monthly reporting that gives you this picture of a “she loves me, she loves me not” world small business owners must be living in. At least life isn’t boring.
From a lenders perspective, it may not be quite so erratic. The larger small businesses are providing good opportunities for lenders to provide new financing. Demand is growing, and that is a good thing. In addition, new forms of financing are growing in popularity. Alternative lenders are providing direct financing to small business owners, and providing competition for more traditional banks. Credit cards are being embraced more and more by small business owners, and provide some nice fringe benefits to owners. Extending payments, rewards programs, and just plain old convenience are among the benefits small business owners can enjoy by paying their vendors with a credit card. Not a bad way to go!
The increased use of small business cards is just one example of a growing trend spawned during the economy’s comeback from the “great recession”. Lenders have better tools available to them to grow their small business portfolios, and also to manage them better. Recent advances in technology and data availability (dare I say “big data”) are providing lenders opportunities for more cost-effective targeting of risk and opportunity. The ability to cross-sell consumer clients who may also be small business owners is a lower cost way to identify solid prospects for commercial products, as well as a way to potentially reward customer loyalty. Benchmarking is another trend that has been shown to provide lenders a tremendous amount of insight into how different segments of customers behave, and help to inform strategic policy.