Fintech is making the business loan process faster, easier, and more transparent
Small business borrowing and financing was stuck in a rut for a long time. But all that is changing. It has now become one of the most dynamic sectors of the financial services industry.
Lenders today are working hard to improve
the borrowing experience for small business owners. As in many aspects of life, tech is making the difference. And like most industries, use of tech increased because people started conducting more business online during the pandemic.
Here are some fintech company trends you need to know about that are making the borrowing experience better, faster, and easier for small business owners, whether they’re getting a loan to improve cash flow, fund a startup, get cash advances, for business growth, or to access a line of credit.
- Artificial intelligence (AI) is transforming the small business loan industry.
- Technology makes it easier for small business owners to manage their finances.
- Tech makes it easy to shop for the best loan terms and rates.
- Technology has made working with loan providers seamless and simple.
- Technology has made the business loan application process faster and easier.
- Technology is making it possible to serve the underserved.
- Technology has made the small business lending industry more reputable and accountable.
- Chat and virtual assistants have made the loan process easier and increased the confidence of small business owners in getting financing.
- Technology has made borrowing more secure.
- Tech has made the borrowing process more transparent.
Artificial intelligence is transforming the small business loan industry.
Artificial intelligence is a wide-ranging branch of computer science focused on building smart machines and leveraging machine learning so computers can perform tasks that typically require human intelligence to do.
Some everyday examples of AI that everyone knows and understands include:
- Siri, Alexa, and other smart assistants
- Self-driving cars
- Social media post distribution logic on platforms like Facebook and LinkedIn
- Robo-advisors
- Product suggestions on e-commerce sites
- Chatbots
- Email spam filters
- Recommendations from Netflix.
AI is also being leveraged in small business lending in ways that you may not be aware of. It’s being used to:
- Improve credit assessment. Instead of having humans check and evaluate small business loan applicants’ personal and business credit scores and other loan application information, computers are now able to do it to determine creditworthiness. This is good news for borrowers because it eliminates the risk of human error and takes personal bias out of the loan approval process. Decisions are made using the same logic and criteria for everyone, which levels the playing field. And if a borrower disagrees with a machine-made loan decision, they can always ask a human to review it.
- Loan personalization. Artificial intelligence is making it possible for online lenders and other loan providers to use the data and information available to them to better tailor and customize their loan packages for different customers.
- Loan product development. The small business loan industry had been a static one for many decades. The types of loans offered rarely changed or expanded. AI is changing all that. It is capable of sifting through millions and millions of bits of information to look for loan opportunities, trends, and needs. This is resulting in countless new loan products that are suited to many different types of people and their unique needs, making it possible for them to start or expand new types of businesses.
- Enhance customer service. Artificial intelligence can help loan providers find backups and breakdowns in their processes and procedures. This is helping them provide better service to their customers, whether in person or online.
- Reduce costs. Artificial intelligence allows loan providers to do more with fewer people, which can help reduce overhead costs and make lending more cost-effective. The reduction in costs can lead to lower interest rates and administrative fees. AI can also identify business inefficiencies and help eliminate them, which can also lower overhead.
- Improve information. AI helps business loan providers better understand their clients. This allows them to provide information of value in things like email newsletters, podcasts, and webinars. All this is resulting in the elimination of spam and junk content.
Artificial Intelligence is a game-changer for small business loan providers. It’s allowing them to serve their clients better.
Technology makes it easier for small business owners to manage their finances.
Loan providers are great at what they do, but they can’t do everything. In most cases, they provide better loan terms and customer service experiences than traditional banks and other financial institutions.
The issue: While most small business owners prefer to take out loans from companies that specialize in them, they often don’t because they’re already dealing with so many finance-related businesses, including banks, payment providers, credit card companies, accountants, financial advisors, insurers, tax preparers and more. They just can’t imagine adding another provider.
The reality: Advances in fintech are making it easy for small business owners to connect their accounts from multiple financial firms all in one place.
Quicken is an example of a company that offers a suite of tools that makes this possible. This is allowing business owners to work with the best financial service companies across all specializations, including lenders, in a convenient way.
Tip: Your accountant, bookkeeper, or tax expert can help you select the best financial optimization or accounting software for your business. Don’t rely on one from your bank or other financial service providers because it will likely favor their own products and services, which may or may not be competitive. Instead, seek out one that’s neutral and able to be used with a broad array of products and providers.
Tech makes it easy to shop for the best financing options, loan terms, and rates.
Just a few short years ago, getting a small business loan, even online, was a cumbersome process. Because of it, small business owners often gave up on loan shopping and took the first loan deal offered to them. In recent years, online loan providers have made getting loan offers easier. It’s possible for some to present you with multiple options on a single screen. Others will scan through multiple offers from different loan companies to serve up the best one for you. If you prefer to do things on your own, it’s relatively easy and inexpensive to submit applications to multiple lenders yourself and compare them to find the best offer.
Technology has made working with loan providers seamless and simple.
From completing an application online to getting it approved to making payments to closing it out, the best loan companies are transforming the borrowing experience into a single seamless process. What used to be a complex and challenging task for small business owners has now become one that’s as simple as anything else they do online.
Technology has made the business loan application process faster and easier.
Of course, small business owners still have to input and submit a significant amount of information to apply for a loan. However, it’s less than it used to be. That’s because so much information about applicants can be found online. This has also made the application verification process much faster. Humans don’t have to be involved in reviewing information submitted on applications. It can be checked virtually. This has
sped up the loan application and approval process from days and weeks to hours or almost instantly. In some cases, loan money can be deposited into a bank account, Paypal account, or onto a debit card on the same day.
If you feel uncomfortable about turning over so much of the loan application and approval process to machines, rest assured knowing reputable loan providers make it easy to consult with a loan expert or challenge anything that’s incorrect if you’re not approved for a loan.
Technology is making it possible to serve the underserved.
The small business lending industry has an unfortunate legacy of providing inadequate financing to
women,
minorities, or people who live or own businesses in disadvantaged areas. Traditional loan providers just didn’t “go there.”
Today, it’s easy for minorities and people in disadvantaged communities to connect online with loan providers that want to serve them. This has dramatically opened the door to small business financing and ownership to many more budding entrepreneurs.
Technology has made the small business lending industry more reputable and accountable.
Just a few years ago, small businesses knew little about the organizations they were considering getting loans from. Today, it’s easy to access information about loan providers from rating services or by checking online ratings and reviews. It’s now possible for small business owners to quickly figure out whether a provider is legit and if they’ll have a good experience with them.
Chat, virtual assistants, and instant messaging have made the loan process easier and increased the confidence of small business owners in getting financing.
Many small business owners gave up on getting loans because they got “stuck” in the application process. Or they had questions they couldn’t get answers to when they needed them. Virtual assistants, chatbots, and instant messaging have changed all that. Some people dislike dealing with chatbots; however, they’ve had a big and positive impact on the small business lending industry. Now, borrowers who need help and support can get it in real-time from a live person or well programmed virtual assistant. Small business owners who need cash no longer have to feel insecure while going through the borrowing process.
Technology has made borrowing more secure.
On the one hand, the move to digital-based lending exposed borrowers to risks related to cybersecurity and theft of personal information. However, the industry rapidly responded by using technology to shut the door to those risks. Protocols have been put in place that protect client data against hackers. Today, small business owners can rest assured knowing their business and personal finances that they share with lenders are protected.
Tech has made the borrowing process more transparent.
In the past, most borrowers had no idea why their loan applications were approved or rejected. Much of the process was controlled by humans and highly subjective. Today’s technology can provide reporting back to borrowers that explain the factors involved in loan decisions. While it can be disappointing to be rejected for a loan, knowing why gives small business owners the power to correct issues with their business so they can get approved or to find lenders that might be open to lending to businesses like theirs.
Small business owners can feel more confident than ever about getting business financing. Tech is making every aspect of the process better than ever.
Did you know: Biz2Credit is known as a leader in leveraging technology to make the borrowing process easier and more effective? Our online application process is one of the best in the industry. If you need financing, you can apply for it through Biz2Credit.
