Why Did The World See An Explosion In Alternative Financing?

There has been an explosion in the alternative financing industry over the last decade. Alternative lenders like Mantis Funding are fast emerging as the reliable go-to option for SMEs looking for quick credit disbursals. But what caused this explosion? Let's examine more in-depth.

The Unwillingness Of Banks To Support SMEs

After the last recession that shocked the world some ten years ago, traditional banks have been way tighter with their purse strings. Bound by government regulations, they follow stringent conditions/standards, which make it hard for many applicants, especially small business owners. These approval criteria include high credit scores and substantial collaterals.

This reluctance of traditional banks in supporting SMEs created a void that alternative lenders could fill. Startups and SMEs have bloomed around the same time, and there was a significant need for non-traditional financial institutions to take over the vacant space left by banks.

For example, alternative lenders like Mantis Funding are doing their best to support SMEs and startups to grow and expand. All this without asking for high FICO scores or collaterals.

The High Demand For Quick Cash Flow

Time and again, the extensive wait at the banks, to approve a funding application, has proven to be a significant deterrent for startups and SMEs facing tough competition in the ever-changing market. In the fast-paced business world, cash flow needs to be quicker and smoother. Since traditional banks couldn't fill in the blank, alternative lenders emerged.

Alternative lenders like Mantis Funding reviews each application fast to disburse the loan within a few days of applying.

Decreased Patience For Extensive Documentation Hassles

When time is money for each busy professional, it isn't surprising that businesses are unwilling to go through extensive documentation filings. Banks are well-known for their tiring paperwork and long waits. With a fast-developing SME economy, there was an immediate need for lenders who would facilitate cash flow without consuming too much time in paper filings.

Thus, alternative lenders who posed no such hassles were able to capture the market. Such lenders like Mantis Funding review each application in the minimum time possible, thus, further reducing the overall wait time and hassles.

Marketplace And High Worth

The marketplace and high worth of the alternative lending industry can be well-assessed by the Chartered Institute of Credit Management article published in 2018. Through a closed group survey, the report stated that only 26% of SMEs thought that their bank could meet their funding needs. In 2019, the transactional value of the alternative lending industry has been around USD 267,123.6 million.

SMEs are highly concerned about their long-term sustainable growth and understand the crucial need for cash flow to refuel themselves. Even after ten years, banks are still reluctant to finance startups and SMEs. And this, in gist, is the biggest reason alternative lenders flourished in the first place. But with Fintech-led automation, alternative lenders have fast evolved from last option to the preferred choice. The alternative lending industry story is only going to get better over the next decade.