When storefronts and restaurants first closed in 2020, it wasn’t clear how long government-mandated lockdowns would last. Over a year later, many business owners are still holding their breath.
But where there’s disappointment for some, there’s opportunity for others. With vaccines rolling out, small businesses are finally on the road to recovery. In fact, new businesses continue to form. More new businesses were registered in the U.S. this year than the year before. In Connecticut alone, 22,832 new businesses opened in 2020.
So what can lenders do to effectively meet the need these businesses have for working capital? Read on to find out.
COVID hit small businesses hard
Small businesses are the backbone of the U.S. economy, accounting for nearly two thirds of new jobs and 49.2 percent of the workforce. As a result, supporting business owners during times of economic hardship is an essential way to stimulate economic recovery and growth. But where should that support come from?
During the pandemic, the government released a patchwork of economic-relief plans to keep businesses afloat. New legislation to support small businesses is moving through Congress as well. However, for many owners, it simply isn’t enough. Bureaucratic hangups, uneven distribution, and mismanaged logistics prevent some businesses from getting the financial support they need.
Small businesses rely on loans
The PPP program offered forgivable loans to small businesses as a means to help weather the storm. But savvy entrepreneurs also see low interest rates as an opportunity to step into the game.
Coupling low interest rates with a talent-flooded job market and consumers who are eager to spend—timing a grand opening with the re-opening of the economy became a strong idea. One that quickly caught on.
Small banks need to speed up the lending process
Entrepreneurial hopefuls alike are viewing business loans as a means to get their ideas off the ground. Still, slow-moving loan applications are enough to keep doors closed and windows shuttered.
Speed is the key factor in the success of any small business loan. Today’s economic landscape shifts rapidly. Many owners have little time and patience to wait for money.
Going from idea to implementation as quickly as possible is critical. Even a one-week delay makes a difference on who wins a company’s business. Business owners, as a result, will choose enders that avoid difficult and time-consuming options.
But how can you speed up the loan process—and get your customers the money they need the moment they need it?
A better way to do small business loans
With a full reopening of the economy on the horizon, lending is becoming an increasingly popular way to prepare for pent-up demand.
But, as remote work proliferates and technology evolves to meet the needs of the digital marketplace, business leaders and consumers are waking up to the inefficiencies of manual or paper-based administrative tasks. For lenders, outdated procedures can lead to higher operational costs, decreased productivity, and lost revenue.
Small business lending should be simple. Replace slow-moving, manual lending processes with a digital solution that automates the process from end-to-end. LendingFront helps small banks and credit unions meet the capital needs of small businesses faster (and more profitably) than ever before.