A Lesson on Lending: Alternative Lenders and Community Banks

Imagine you are a small-business owner running a profitable family restaurant for several years and looking to expand to another location. To do this, you need a $70,000 loan, but your bank has declined your request. Rather than go to a different bank and complete another three-inch-thick loan application, you may decide to skip this time-consuming, manual application process and instead apply for a loan online through an alternative lender, which only takes a few minutes.

Perhaps you are a millennial that wants to start a business. You would like to obtain a small business loan to accomplish this, but obtaining approval for a loan seems like a complex endeavor. Instead, you choose to rely on your personal credit to launch and grow your company.

Small-business lending is touted as a core component of the community banking business, but community banks often miss opportunities like those above, losing to alternative lende ...

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