Read on Twitter
1/ Yesterday, I posted about my concern that many small businesses are currently at a disadvantage. That spurred some great questions about why FinTech lenders are so important. https://twitter.com/BrockBlake/status/1248309430485020673?s=20
2/ In a perfect market, the community banks would focus on the larger deals that require personal touch & hand holding. This is their superpower -- FinTechs can’t compete. In fact, MOST of the $350B would actually still be funded by community banks/CUs (bc the loan size...
3/..would be so large). The downside to a comm. bank is they are not built to handle a high volume of small loans. This is not a knock… they just aren’t built for it. Over the past few days, many smaller banks have been completely overwhelmed w/ only a couple 100 applicants.
4/ On the flip side, FinTechs don’t want to touch the larger loans. Instead, they’d prefer to fund the millions of VSBs (very small businesses) w/ loan sizes less than $350k. Not only do they prefer the smaller loans, processing high volumes of smaller loans IS their superpower.
5/ The technology capabilities of FinTech lenders allows for digital document gathering, automated KYC/KYB/AML, API integrations for data verifications, and high volume submissions to the SBA.
When ALL lenders are approved to participate, market forces will play out and ...
When ALL lenders are approved to participate, market forces will play out and ...
6/ .. the market will be efficient; meaning… superpowers will prevail allowing community banks/CUs to focus on larger loans and FinTechs to efficiently fund high-volume smaller loans.
