Why Fast Growing Small Businesses Are Fleeing Big Banks
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- On October 15, 2016
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According to the J.D. Power 2016 U.S. Small Business Banking Satisfaction Study, published October 2016, small businesses that are growing sales 20% or more annually are considerably more satisfied overall with their banking experience than their counterparts at small businesses with lower or no annual growth.
However, the study finds that 22% of these fast-growing small businesses have switched banks in the past 12 months, compared with only 5% of the other small businesses. Banks should also be concerned by the finding that 25% of owners of fast-growing small businesses indicate they intend to switch within the next year.
61% of fast-growing businesses that applied for a loan in the past year are considering switching banks, compared with 19% of those that have not applied for a loan. When a fast-growing small business is seeking a loan, they are increasingly shopping around for the best loan terms which is creating competition. It is also interesting to note that 73% of fast-growing businesses are considering a non-bank alternative to a loan. It doesn’t help that the loan process at a traditional bank is painful, approximately 49 percent of respondents said applying for a new loan was “very easy.”
There are many potential reasons for fast the growing dissatisfaction with traditional banking, which is coinciding with the rise of alternative finance options for businesses of all sizes.
Business Cash Advance Loans, Bad Credit Business Loans and Cash Flow Loans are possible without the time, extensive paperwork, intrusive approval process and credit checks that have turned many businesses away from the neighborhood banks, which are more often than not, a subsidiary or branch of a large corporate behemoth. The days of a loan officer knowing your name and your business and approving a loan with a handshake based on trust and faith is a distant memory.
Unlike traditional banking, bad credit is not a disqualification to a loan from an alternative lender, there is typically a substantially quicker funding process, easy application process, no personal guarantee and an approval rate of 95% at some companies, such as National Business Helpers.
If you are a fast-growing small business, it may be advisable to consider alternatives to traditional banking, you may discover that the advantages of alternative finance, which are becoming more and more mainstream, outweigh the perceived comfort and security of a traditional bank loan.