Lending

How Outsiders Are Changing the Business of Lending

MEDICIGlobal Head of Content

The total addressable US small-business lending market is $186 billion, which accounts for only 1% of the total loan market. Today, big banks (assets of $10 billion+) are granting more than one-quarter of the small-business loan applications they receive. The 25.3% approval percentage is another new benchmark for big banks.

However, FDIC reports the total dollar-volume of small-business loans outstanding across all FDIC-insured institutions is down 13% since 2008. According to the Federal Financial Institutions Examination Council (FFIEC), the number of small-business loan originations is down 41.4% since 2008. For comparison, the US economy has grown almost 25% over the same period, according to the US Chamber of Commerce.

Although the approval rates of small-business loans by large institutions is at an all-time high in the US, it’s still only a quarter of applicants that get the necessary funds. As for the developing world, estimates suggest that 65 million, or 40% of micro, small & medium-sized enterprises (MSMEs) have unmet financing needs, resulting in an MSME finance gap in developing countries at $5.2 trillion.

Despite the fact that approval rates from large institutions are at all-time high, about 75% of small-business loans are denied by...

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Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.