Kabbage: Online lenders brings outstanding benefits to small businesses

Online Lenders Smallbiztechnology\

Small businesses keep the United States going. From doctors and lawyers to builders and architects, coffee shops and art galleries, the people of the United States would have very different lives without small businesses. Afterall, small business keeps the economy going, but the economy does not always help them. Until now.

It’s no secret that small businesses often have difficulty securing financing from traditional lenders. Large businesses have very little trouble securing loans, but according to the Federal Reserve Bank in New York, small businesses spend an excessive amount of time trying to find credit. In fact, small businesses need more than a full day to find and apply for loans. Usually, they need to apply to at least three institutions before they are even considered for a loan.

Reaping the financial benefits

According to a recent report from NDP Analytics, small businesses are finally able to reap the benefits of readily available financing from online lenders. The dollar amounts from these loans show the power of easy lending. In the report, the loan-to-sales ratio in lending to all types of small businesses was 2.3. The numbers were staggering:

  • For every dollar that was loaned, small businesses recorded 2.3 times more in revenue.
  • In the retail and wholesale trade industry, $2.8 billion was loaned, and over $8 billion in revenue was recorded, which was a 2.8 loan-to-sales ratio.
  • For every $1 that was loaned, businesses averaged $3.79 in revenue.
  • $9.9 billion was loaned to small businesses resulting in $23 billion in sales.

Bringing in more talent

The best news from this report was not just the dollar amounts that these loans generated; it was the creation of new jobs. When small businesses are able to generate more revenue, they need more people to keep the good things coming. Between 2015 and 2017, over $10 billion was loaned to small businesses through online lending. This resulted in over 350,000 new jobs.

One of the online lenders that has helped small businesses is Kabbage, Inc. This lender gives about 1400 small businesses over $10 million each day through an automatic online lending platform. When small businesses use Kabbage, they can get loans in minutes, rather than days. This hassle-free solution has made Kabbage top choice for small businesses all over the United States and in Europe. Kabbage has loaned more than $5.5 billion to small businesses since its inception in 2009.

Changing several small businesses at the same time

These online small business loans are changing the way that small businesses operate in the United States.

Prior to having access to online lenders, over 60% of small businesses were unable to use loans to expand, pay operating expenses, and purchase inventory. The majority of small businesses needed loans of $100,000 or less.

Because traditional lenders made it difficult for small businesses to access money, they usually turned to family, friends, savings, or personal credit cards. Only 5% of small businesses turned to traditional bank loans.

Helping the little guy pays off

Kabbage and the other online lenders are changing lives. They are loaning money quickly – often within hours of applications being filed. This gives small businesses the opportunity to make an impact on their communities. The small business is not the only benefactor of these quick loans from online lenders. Everyone in the supply chain benefits as the small business is able to buy equipment or supplies. Helping the little guy really does make a big difference.

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SmallBizTechnology.com Editorial team. Striving to publish news, insights, and interviews focused on technology and more for growing businesses! See our sister site Smart Hustle Magazine