When banks pulled back from lending to any small business perceived as risky in the wake of the financial crisis there was a new group of non-bank lenders who stepped in; online small business lending platforms like Kabbage, OnDeck, Square and PayPal have all helped to provide badly needed capital to small businesses; the target market for these fintech firms is small businesses in need of $250K or less of capital in most cases; these lenders have helped fuel economic growth since the financial crisis and now banks have started to partner with these firms to get their own piece of the action; the big unknown for the platforms is how will they perform in a downturn, something we have not seen in a big way since the financial crisis; the fintechs are able to be more nimble than banks and all have said their underwriting is top of the line, with signs of a downturn starting we might soon know the answer. Source.
