28
Apr

Payday Loans, Small Business Loans and Car Title Loan Strategies

 

Payday, Small Business & Installment Loan Biz

Payday, Small Business & Installment Loan Biz

It’s a well known fact that it costs a bank as much to make a $100,000 loan  as it does a $1,000,000 loan; resulting in less profits for the bank. Thus, banks prioritize small and medium businesses [SME’s] by the loan amounts each SME requests.

The current challenge is that about 60% of small businesses [SME] want loans below $100,000.

Thus the opportunity! While the CFPB and state AG’s – in addition to city govermnment – attack the payday loan/installment lenders, there lies a HUGE opportunity for lenders to fund small businesses.

According to The Harvard Business Review and Morgan Stanley, “Last year, less than $10 billion in small-business loans was funded by online lenders, a fraction compared to the $300 billion in SME loans outstanding at U.S. banks. However, the current meager market share held by online lenders masks immense potential: Morgan Stanley estimates the total addressable market for online SME lenders is $280 billion and predicts the industry will grow at a 47% annualized rate through 2020. They estimate that online lenders will constitute nearly a fifth of the total SME lending market by then.”

Your goal? Transition from a 100% focus on consumer lending, where the HEAT is on, to small business lending where there are very few rules and virtually zero strong brands as of today.

Stay under the radar; it’s easy. You have, or can easily obtain, all the tools, knowledge, and technology required to pivot from payday and installment lending to servicing small business funding requirements. It will be years before the leviathan – read FED’s and state AG’s – begin to address this lending opportunity.

Let me emphasize the findings of The Harvard Review working paper: “One answer became clear: a gap in access to credit for small businesses did exist and was 1 Mills, Karen G., and Brayden McCarthy. “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game.” Harvard Business School particularly persistent in small dollar loans— those defined as under $250,000. This finding is noteworthy, as this is the level of loan that most small businesses want; more than 70 percent of small businesses seek loans in amounts under $250,000, and more than 60 percent want loans under $100,000.”Harvard-SME-Small-Medium-Business-Lending-2017

Here’s a link: Harvard-SME-Small-Medium-Business-Lending-2017