Future Trends: Finance
This is a selection from Humanly, Issue 02, which focuses on Generation Z and teen culture.
Funding opportunities abound for the indie entrepreneur (see Kickstarter) and the massive start-up (angel investors, venture capitalists), but not so much for small- and medium-sized companies that are too new, too risky, or not sexy enough for traditional lenders.
Issue 02 • 2016 Get Issue 02
Yet, with half of the American population expected to work independently by 2020, according to The Freelancer’s Union, there needs to be more ways to support them. Stepping in to bridge this gap are tech-based alternative lenders that provide a boost of liquidity with the click of a mouse to an underserved sector of Main Street: restaurants, retailers, auto repair shops, and other local service providers. OnDeck and Kabbage both use automated data aggregation software that determines within minutes whether or not an online applicant is approved; OnDeck provides loans of up to $250,000 to businesses with annual revenues of $100,000 that have already been in business for at least one year, while Kabbage deals with smaller businesses and even provides lines of credit specifically for Amazon and Etsy entrepreneurs, who have a notoriously hard time proving their worth to brick-and-mortar banks. Dealstruck and Funding Circle use a purely peer-to-peer model, meaning wealthy investors loan up to $500,000 in capital. Meanwhile, Fundbox, and BlueVine give businesses cash advances against outstanding invoices to clear up cash flow issues, often in under an hour. While bypassing banks is established practice in consumer lending (Lending Club and Prosper claim to have funded more than $5 billion in consumer loans to date), small-business opportunities are set to grow with the rise of loans that are efficient, competitive, and transparent.
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