Dymphna Boholt on Alternative Options for Securing Small Business Capital
Small business ventures play a sizable role in economies all over the world. In the United States, for example, small businesses represent 99 percent of all businesses operating within the country. Despite the critical role played by small businesses, the overwhelming majority of small business ventures find it difficult to secure much-needed capital through the traditional methods. According to Dymphna Boholt, recent technological advancements might be essential in ensuring that small business ventures are no longer so obviously underfunded.
The principal issue with securing small business capital is not related to the view of traditional lenders with regard to the economic importance of small businesses or the risks associated with lending to a small business. The issue appears to be the costs associated with underwriting these loans, as the traditional methodologies for underwriting a small business loan are too expensive to be worthwhile from the perspective of a lender. Boholt believes that technological advancements can solve this issue and will thus enable small businesses to secure the capital they need to thrive.
With recent technological developments, a digital lending platform can take the place of banks in meeting the lending needs of small businesses. Through the use of currently available technology, such a lending program could efficiently function as an extender of loans to small businesses that would not have otherwise had access to this kind of capital through a traditional lender. According to some estimates, digital lending platforms may soon take up as much as a fifth of the total market share of lending, which means there currently exists a significant opportunity for small businesses to take advantage of the availability of capital due to recent technological advances.