How Did More Short-Term Loan Providers Emerge in the US?
These online loans are usually available to business borrowers of every credit profile. These are versatile loans which can be used to shore up net working capital, pay a supplier, and cover payroll, to name some use cases.
These business loans involve a quick application and approval procedure, all done through online portals. Since the recession of 2008, banks in the US are lending less money to small-sized businesses’ owners as the former have extremely stringent approval requirements, and because giving out smaller loans is just not profitable for them.
Banks are lending more amounts of money, but they need to be more to match the same level as in the late 1990s. Therefore, short-term lenders have emerged to bridge the gap and help business owners pay for inventory, take advantage of new opportunities, and cover payroll. Small business owners like the convenience and flexibility that short-term loans have to offer, so online lending companies are likely to prolong their existence in this space.
Some banks offer short-term loans which business owners can also apply for online. However, these loans are meant for highly creditworthy borrowers.