The Promise and Perils of Alternative and Online Lending

There’s no question that access to capital is one of the most significant challenges for small business owners. Faced with an uneven lending market that often favors big businesses and a decline in small business lending from traditional lenders, small business owners have long turned to nontraditional sources—like personal credit—to find financing that meets their businesses’ needs. Now, the advent of online funding and other new lending sources is transforming the landscape for small business financing.

This development holds the potential to get needed capital to entrepreneurs and to communities that have long been underserved; however, it also opens the door for bad actors looking to take advantage of entrepreneurs. Not all online lenders are equal and some mask very high rates. In the absence of oversight of this new lending space, efforts like the Small Business Borrowers’ Bill of Rights are seeking to provide guidance and promote transparency among alternative lenders. This is why it’s especially important to also expand sources of reliable and traditional lending, like the SBA’s 7a loan program.  

Join us for a conversation on policies to expand traditional lending options, the growing realm of alternative online lending and policies and efforts being made to increase transparency and responsibility in the industry.