SEPTEMBER 2018 • LONGISLANDPRESS.COM 21
POINT OF VIEW
ONLINE LENDING:
FAST AND FLEXIBLE
By SCOTT STEWART
You opened a takeout counter shop
in Bayside three years ago, and it’s
been quietly humming along. But
after some local food blogs mention
your signature smoked Cuban sandwich,
people are starting to line up
down the block. You can’t afford to
lose this kind of momentum.
You’ll need to find enough capital
to hire two more employees and buy
a bigger oven. Last time you went to
the bank for a loan, it took a week
to fill out the application and three
months to get approved. Luckily, you
have alternate funding options – like
an online lender.
We know small businesses –
your grocers, laundromats and
landscapers – are vital to New
York’s economy, but they face a
widening credit gap. Consider the
hurdle every small business faces:
access to timely and affordable
credit. According to a 2016 Federal
Reserve report, 67 percent of
businesses with annual revenues
below $1 million experienced credit
shortfalls. Small-business lending
by traditional banks has declined 20
percent over the last 10 years, costing
New York an estimated $8 billion
in gross domestic product. With 3.9
million New Yorkers employed by
small businesses, this affects you or
someone you know.
Online lenders have stepped up.
From 2015 to 2017, five major online
lenders funded $758 million to
11,490 small businesses in New York,
according to a recent study by NDP
Analytics. That capital then created
over 20,000 jobs and almost $800
million in wages. And online lenders
are making a big impact in often
overlooked communities: almost a
third of those loans fueled businesses
in zip codes with below-median
incomes.
It’s no surprise why small businesses
are turning to online lenders.
Online lending is fast and flexible,
offering an alternative to savvy business
owners seeking smaller, shorter
term loans. Technology enables
online lenders to gather information
about an applicant’s creditworthiness
more efficiently, meaning they
can approve borrowers and provide
funding when it matters.
But New York’s Department of
Financial Services recently recommended
new regulations that would
drive out online lenders. By imposing
burdensome requirements and
arbitrary rate caps to block online
lenders from bringing affordable
credit to the small-business market,
these regulations would choke off
capital to businesses and entrepreneurs
across the state. It’s clear who’s
on the losing end of these recommendations:
New York’s hard-working
small-business owners and their
employees.
What New Yorkers need is thoughtful
regulation that promotes responsible
innovation and recognizes
the value of online lending. Online
lenders empower small businesses
and their local economies to succeed.
Just because your sandwiches are
old school doesn’t mean your lender
should be. Meanwhile, you can turn
your focus back to the eager New
Yorkers waiting around the corner.
Those Cubanos aren’t going to grill
themselves.
Scott Stewart is the CEO of the
Innovative Lending Platform Association,
the nation’s leading trade
organization for online lending
companies serving small businesses,
including OnDeck, Kabbage, Lendio,
The Business Backer, Breakout Capital,
PayNet, 6th Avenue Capital and
Orion First.
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