September 4, 2019
By Caity Witucki
Contributing Editor, SBA C-Suite Tips Wednesday
SBA C-Suite Tips Wednesday — “Riches in Niches” Know the Trends in the Lending Landscape
Trends in the small business lending industry are affected by supply and demand.
During the recession, the problem was with the supply. Lenders were simply not making small business loans. In 2008, the CEO of Bank of America, Ken Lewis, referred to the bank’s small business portfolio as a “damn disaster.” Other lending institutions agreed that small business lending was just not a profitable asset.
Today, the problem has flipped. There are a lot of new lenders who want to get into the small business lending niche. With more supply, lenders have begun specializing in specific types of small business lending.
On the Defenders of Business Value podcast, the Coleman Report’s very own, Bob Coleman, explains that small business entrepreneurs are finding it increasingly important to seek out lenders who are properly aligned with their financial and professional goals. This is especially true for small business entrepreneurs in “difficult” industries such as gas stations and convenience stores – which have complications that come along with selling gas, food, nicotine, and alcohol. Small businesses in these industries will often get turned away from lending institutions that do not have experience working with their niche. As a result, they are seeking experts who have an appetite for their particular business.
In response to the growing demand for specialization, many lending institutions are marketing themselves as experts on specific difficult spaces. This not only guarantees business from entrepreneurs who were turned away from institutions that do not understand their industries, but also provides the borrower with a better experience.