The Lending Space Is Changing Shape

Traditionally, a small business owner would peddle their ideas from bank to bank trying to prove that their company was reliable and could repay its loan. The process could take anywhere from weeks to months and often kept smaller firms from expanding for lack of cash. However, a new pool of lenders is hoping to change all of that by making small business loans faster and easier to obtain.

Online lending has become a surging trend in the financial space as companies like Bond Street, Marketplace Inc. and Social Finance Inc. give small businesses a new way to get the funding they need to continue expanding. Private companies that provide online loans

$542.2 million worth of equity in the first quarter of 2015, a record breaking figure that represents a 76 percent increase from last year. Venture capitalists and investors have been throwing money at this space recently as more and more business look to secure loans in a non-traditional way.

Although the trend appears to be growing, the industry is still relatively new, leaving many to question whether or not fintech companies will be able to stand the test of time. Traditional lenders say that private, online loans may not be the most secure way for a company to grow. Some worry that a tough economy would cause many of the latest fintechs to crumble. Small loan amounts and a relatively small customer base make private, online lenders look less stable than established financial institutions, which have been lending for years.