As a management consulting firm in the financial industry, Bridgeforce
has worked with clients around all facets of small business lending. This,
combined with our direct experience as a growing small business, has led
to the identification of two key challenges facing lenders and small businesses:
- Tightened Credit Standards and Lower Quality Applicants
- Reduced Loan Demand
To resolve these challenges, lenders must implement smarter credit risk
strategies. Small businesses stimulate economic growth and can be a long-term
profitable segment for lenders, making convenient and accessible funding
for these companies essential. This type of lending needs a laser-like
focus and needs to be reliant on the following strategies:
- Risk/Business Segmentation Lending – Lenders need to look at the
whole picture, not just business revenue. This includes a combination
of references, risk, revenue, business model, leadership and business segment.
- Sector Segmentation for Portfolio Growth – Developing and improving
relationships with existing customers and proactively finding new opportunities
are critical. Additionally, a sector segmentation-based lending strategy
where lenders develop expertise for the various small business types by
sector, can enhance relationship lending.
- Product Offering(s) – Lenders can better serve small business customers
by offering one-stop, multi-service product lines. Product fit, repayment
flexibility and ongoing access to funds are important factors in small
- Relationship Lending – As most small business owners want to have
a long-term relationship with their lender, developing a strong business
relationship from the outset is key. This allows both parties to profit
in good economic times and offset losses during economic uncertainty.
For more information on this topic, a
full-length PDF of this white paper is available for download.