New York Report

On May 22nd, 2018, NDP Analytics released a report on the economic benefits of online lending to small businesses in New York

Five participating online lenders funded over $758 million to 11,490 small businesses from 2015 to 2017

These online loans generated $1.8 billion in sales for small business borrowers in New York – meaning that for every $1 borrowed, the small business’ sales increased by an average of $2.38

Small business borrowers used their loans to create 20,154 new jobs (and nearly $800 million in wages) in communities across New York

The positive economic impacts of online lending are substantial for both the small business borrowers and their communities

Nonbank, online lenders are becoming more mainstream alternative providers of financing to small businesses. […] Borrowers can apply in minutes and receive funds in days or even hours, expedience made possible with data-driven technologies. The industry’s growing reach has the potential to expand access to credit for small firms […] (page 1)

Online lenders are part of the emerging fintech industry that is providing a variety of data-driven financial products and services. […] In 2016, some one-in-five credit applicants (21 percent) sought financing at an online lender, rising to nearly one-in-four (24 percent) in 2017. (page 3)

Data suggest [online lenders] may be increasing credit access for certain small businesses. […] Applicants to online lenders are more likely to be smaller (revenues under $1 million), newer (in business less than five years), and minority-owned firms as compared to businesses applying to traditional lenders only. A separate analysis found that online borrowers have characteristics similar to the businesses that were denied credit from banks, suggesting that online lenders provide credit to small businesses that likely would be denied financing otherwise. (page 4-5)

Asked about the toughest part of running their businesses, most participants cited the challenges of managing their cash flow. (page 9)

When presented with the SMART Box: “Following the product review exercise, participants were presented with a stylized sample disclosure box […]and asked their impressions of the format. Not surprisingly, participants overwhelmingly liked the format and the wealth of information contained in the table. Among their comments: ‘I like this and see what is important to me!’; ‘This is exactly how I would like to see the breakdown’; ‘This is straight to the point’; ‘It has everything a borrower would want to know’; and ‘I would prefer a standard format like this when comparing loan rates.’” (page 21)