While the use of online lenders for small businesses remains the same, the familiarity increases:

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Data for today’s episode comes from the Mercator Advisory Group’s report – Small Business Mindsets and Banking Habits: Attitudes Matter.

While the use of online lenders for small businesses remains the same, the familiarity increases:

  • 26% of small businesses currently have a loan from an online lender
  • Over the past 3 years, around a quarter of small businesses have taken out a loan from an online lender
  • In 2018, 18% of small businesses had a loan from an online lender – but no longer do so this year
  • 10% of small businesses were not approved or chose not to use a loan from an online lender in 2019
  • 21% of small businesses have investigated online lenders for loans, but never applied
  • In 2017, 25% of small businesses were unaware of online lenders
  • In 2019, 19% of small businesses were unaware of online lenders

About the report

The latest primary data report from the Mercator Advisory Group, Small Business Mindset and Banking Habits: Attitudes Matter, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2019, reveals that 61% of small businesses are satisfied with the size of their business, but 56% have active plans for growth. A majority (65%) also see the value of using social media as a business tool and see the value of cloud computing (62%). Additionally, 55% say keeping up to date with new technology is “essential” to the success of their business.

When asked where they go for advice on running their business, small businesses are most likely to say they get advice from their bankers (59%) and accountants (43% ). Employees are a close third at 39%. Companies that have been in business the longest (10 years or more) are more likely to use multiple sources of advice than newer companies. Along the same lines, larger companies are also more likely to get their advice from a number of different sources.

When asked about their primary financial institution, the vast majority of US small businesses (85%) say they are satisfied with their primary institution’s commitment to small business. That said, a decline in branch usage is apparent in this year’s survey. Last year, 53% said they used their agency several times a year. In 2019, that number fell to 46%. This result is supported by the decline in the use of tellers for depositing checks and cash (by 8 percentage points each).

Small Business Mindset and Banking Habits: Attitudes Matter is the third of three reports summarizing the results of the 2019 Small Business PaymentsInsights survey, the fourth annual survey of small businesses conducted by Mercator Advisory Group. This was an online survey of 2,002 small US businesses (between $100,000 and $10 million in annual revenue) regarding their use of payments and banking services.

“This year, we’ve added new questions to address small businesses’ attitudes towards technology, how they view their business and who they get advice from. We felt there was a need to better understand who are the people running small businesses and how they view their business. When it comes to banking, satisfaction remains high, but reported branch usage appears to be declining,” notes report author Peter Reville, director of primary data services at Mercator Advisory Group.

The companies mentioned in this research report are: Kabbage, Lending Club, OnDeck Capital and Prosper.

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