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Feast or Famine – Smart Solutions to Accelerating Small Business Lending

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 business lending.
  • 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.

Category: Credit