LendingTree Finds Nearly 60% of Small Business Owners Do Not Compare Lenders
Why Business Owners May be Missing Both Opportunities and Savings
Interestingly, despite the fact that many small businesses today are struggling to obtain financing, according to the LendingTree study only about 1 in 4 (24%) small business owners even went online to research financing and funding options for their loans.
According to The Business Backer CEO, Jim Salters, getting a loan or funding is probably actually the easiest it’s ever been, “There is just a tremendous amount of investment and innovation in serving this sort of non-bank or sort of beyond the traditional credit models, and business models, and capital structures that existed in the past. So we’re seeing a lot of non-bank companies that are seeing increasing amounts of investment from venture capital, private equity, and lending capital funds.” This investment and innovation is increasing available funding supply.
Business owners may not realize the relative ease of applying for loans online and its availability from new online lenders. Because lenders offer very different loans from one another, shopping online for small business loans aggregates available options without a time-intensive search. Borrowers can quickly and easily compare loan requirements and the lenders’ estimated time to fund, creating a more personalized loan shopping experience.
Additionally, business owners may be simply missing out on potential savings by simply not shopping around for the best interest rate and comparing lenders.
“Many assume that the bank or lender they work with will always give them the best rate, and while that may be the case sometimes, it doesn’t hurt to see what options are available. Lenders compete with one another to earn trust and earn market share by offering better rates, terms and service just like any other business,” said Doug Lebda, CEO of LendingTree. “The LendingTree loan marketplace offers a way for business owners to compare loans from multiple banks and lenders, including alternative lenders, with only one application, for less time than it would take to go the bank.”
Additional Data Points
Top 3 struggles of obtaining a small business loan
· 22% - Gathering required documentation
· 20% - Long application process
· 16% - Speed of approval
Primary decision factors when choosing a business loan lender
· 51% - Established trust with the lender
· 9% - Value brand recognition/reputation of the lender
· 30% - Ease/Convenience of application
· 27% - Interest rate and costs
What Do Small Business Owners Borrow?
· 18% of borrowers were seeking loans of less than $10,000
· 36% were seeking loans between $10,000 and $50,000
· 22% of applications were for a new business
· 33% for working capital (cash-flow, day-to-day ops, payroll, etc.)
· 20% to purchase or lease equipment
· 17% for debt consolidation/relieve existing debt
The 2015 Small Businesses Survey was conducted online within the United States by SurveyMonkey on behalf of LendingTree between February 25 and March 18, 2015 among a nationally representative sample of 170 U.S. small business owners whom applied for a small business loan within the past twelve months.
LendingTree (NASDAQ: TREE) is a leading online loan marketplace with one of the largest networks of lenders in the nation, empowering consumers as they comparison-shop across a full suite of loan and credit-based offerings. LendingTree provides an online marketplace which connects consumers with multiple lenders that compete for their business, as well as an array of online tools and information to help consumers find the best loan. Since inception, LendingTree has facilitated more than 35 million loan requests. LendingTree provides access to lenders offering home loans, personal loans, student loans, personal loans, business loans, home equity loans/lines of credit, auto loans and more. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.