Advocating for Alternative Finance

This month, The Credit Junction interviewed Chris Walters, head of The Coalition for Responsible Business Finance (CRBF), a group of businesses and service providers that advocate for the value of alternative financing opportunities for small businesses. The Coalition's purpose is to bolster the trust and credibility of the Non-Bank Small Business (NBSB) lending and finance industry through responsible business practices while ensuring that online products and services meet the needs of America's small business community.

Read his full interview, below!  

1. What is The Coalition for Responsible Business Finance and how does it help small businesses? How does it help lenders?

The Coalition for Responsible Business Finance[1] is a group of FinTech small business lending companies and service providers advocating for the advancement of small business financial technology products and services. The Coalition's purpose is to promote responsible small business lending practices in order to meet the needs of America's small business community.

2. As someone who helps and speaks to a wide range of small businesses across industries, how do you see the small business landscape in America today?

Chris Walters, Head of The Coalition for Responsible Business Finance

Chris Walters, Head of The Coalition for Responsible Business Finance

Small businesses are optimistic in 2017. A recent February survey by the National Federation of Independent Business [2] stated that small business optimism hit a level not seen since 1984. While this optimism is historic, small businesses need to figure out how to find find capital to grow. Fintech small business lending platforms will be one of the most dependable capital providers for an optimistic and growing small business sector.

3. What are some of the biggest challenges you think that small businesses face today regarding financing? 

Small businesses historically turned to their local bank down the street to finance their business activities. Recently, banks are shying away from small business loans because of the high costs to underwrite the loan. But banks are now investing in Fintech small business lending platforms to take advantage of the innovative technologies that speed up the process of underwriting a loan. These financing challenges are being offset by technology which will lead to a better experience for small business customers. 

4. What are the advantages and disadvantages of using alternative sources of financing?

The biggest advantage is that technology makes it possible for non-bank lenders to provide a more efficient application and underwriting experience for a borrower. Many banks are beginning to partner with Fintech small business platforms to not be left behind.

The biggest disadvantage is that the government has been slow to adapt new rules to help Fintech companies continue to grow. The federal government needs to streamline the rules for Fintech small business lenders. Promoting certainty in the regulatory landscape for Fintech companies will result in more competition and better pricing to the small businesses.

5. Do you have any parting words or advice to small business owners?

Several years ago, financing your small businesses was done by walking into a local bank and waiting several weeks or months to receive a credit decision. Now with the advent of technology, small businesses can quickly access affordable credit from a variety of Fintech small business lending platforms.  If you have the cash flow and good credit to build your business with new capital, you should consider borrowing from one of the Fintech small business lending platforms because of the speed, flexibility, and affordability of their offerings.

[1] Current Members of the Coalition for Responsible Business Finance include: Breakout Capital, the Business Backer, Fundation, Orion First, Paynet, and Provider Web Capital. The Coalition for Responsible Business Finance website is (www.responsiblefinance.com).

[2] http://www.nfib.com/assets/SBET-December-2016.pdf