If consumers and businesses are really gaining more confidence in the economy, this may easily translate into an increase in loan applications, and therefore the need to get them processed in a timely and secure way. It appears that this may be the case, according to information from the Associated Press.
The story, by Joyce Rosenberg, notes that the current economic climate has improved to the point that banks are becoming more lenient about their lending. She cites information from the FDIC on the amount of small business loans dispensed by banks last year, which was at a rate nearly 1.5 percent higher than the 2012 average.
“Still, caution remains, especially when a business is young or considered risky,” Rosenberg writes. “But overall, lending is up, a hopeful sign for the economy because small businesses that borrow may be willing to expand and hire.”
One reason that it may be easier for companies to access credit in 2014 is that new lenders are using alternative data sources to identify creditworthy applicants who may not meet traditional criteria. The New York Times reported on the growth of alternative lenders, specifically mentioning companies like Fundation, that are using modern technology to provide better options to borrowers.
Companies looking to participate in this market need smart credit risk management tools to ensure that they are making sound decisions without affecting the efficiency of the transaction.
As we noted in our fourth-quarter newsletter, current conditions in the market may very well continue to drive more applicants toward alternative lenders, who seem to be gaining more attention as their important role in the economy becomes clear. However, this trend can only be kept up if businesses make the effort to treat their transactions seriously.
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