Small business

5 Financial Trends of 2016 for Small Business Owners

Financial experts and small business owners should watch the market before proceeding to deal with their investments. That is because being aware of the global economic trends can help them know the ripe investment opportunities. They also help entrepreneurs to keep a watchful eye and predict obstacles depending on the market situation. 2016 is the year for business growth, entrepreneurship and start-ups. While there may be many choices and new opportunities, some of them may turn out to be misleading that may cause more harm to customers than help them out.

Having said that, borrowing money for small business investment has turned out to be fruitful. As lenders try to provide customers with quick access to money, innovators are identifying fundamental financing rights that will lead to better business investments and a promising future.

#1-Significant Emergence of Online Lending

Following the 2008 financial crisis, availability of traditional loans to small business borrowers was cut short. The financial landscape looked unsteady and access to capital was limited. The process of application for a loan was time consuming too, the approval of which too seemed bleak. Such difficulties ultimately led to the emergence of a new kind of alternative lending process– the online lending.

Online application for a loan does not involve any difficulty. It requires the submission of minimal information following which, a borrower can receive an approval or answer to any queries instantly. Besides, the use of quick and efficient algorithm, fast access to lesser amounts of loan and the benefit of repaying the loan in smaller increments are some of the benefits of online lending that has successfully changed the game. From the early beginning of 2014, at least one in every five business owners have applied for an online loan. The year 2015 saw a significant prominence of online lending among borrowers and this is expected to continue growing in 2016.

#2-Growth of Online Transactions With Technology

About 80% of small business owners now go online to search for a loan. Lenders can expect to find more of such customer behavior practices as use of the internet becomes a commonplace activity. The online lending market is expected to grow and lenders must better adapt to the advanced lending options, be it buying inventory or managing logistics and shipping.

#3 - Call for Transparency

Popularity of online lending among small business owners requires lenders to have increased transparency. The issue of transparency is at present a pressing concern and has prompted alternative lenders to follow the Small Business Borrowers’ Bill of Rights, while trying to instill faith into a customer’s mind. In addition, many lenders are increasingly becoming transparent in their lending options, rules, and terms and conditions. This is not only helping small business owners, but is also giving such lenders an edge over the others.

#4 - Shift to Justiciable Products and Fair Collection Practices

The focus will shift towards more justiciable products and fair collection, as alternative business lending continues to grow.

Many a time, customers end up choosing a product that appears to be the best choice one can make when searching for a loan package. However, in the end, most of these loan packages turn out to be carrying hidden terms that a borrower was unaware of at the time of signing the deal. The result - the glorious realization that you have not yet cleared your debts even after paying off every Dollar of your hard earned money for 1 year. On the flip side, some customers are unable to pay back the loan on time when inconvenient circumstances suddenly overtake their daily course in life. The problem will hopefully come to a stop with increased online lending, since customers will get the chance to take an even closer look at the loan products, analyze them and compare with terms offered by other lending companies.

With online lending, lenders too will try coming up with affordable terms and payment conditions that are comfortable for customers and help win over their confidence. This indicates that with online lending, more line of credit services will be available in the market that can help resolve catastrophes and conflicts.

#5 - Contributing to Responsible Borrowing

Poor underwriting practices and over-aggressive lending were often a matter of nuisance for borrowers. However, with the coalition of responsible borrowing rights for business owners, lenders are likely to now approve loans only to customers who can repay the amount they acquire.

Just like every year, 2016 too is not an exception. It will have its own ups and downs. However, a vigilant small business investor can always identify the signs first that will bring good investment returns. As a business start-up or a market investor, you too can achieve a lot from what you invest if you can simply follow this year’s market trends.

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