As alternative lending to small business continues to gain traction in the U.S., it's important to gauge how big the trend really is. Balboa Capital, an Irvine, California-based small business financing firm has compiled research that finds In 2015, there were more than 1,300 lenders in 2015 following a year of 100 percent growth in 2014. The entire market for alternative lending is expected to reach $350 billion by 2025, with online lending representing about two-thirds of that amount.
A few reasons for its popularity: a much higher approval rate than traditional banks, far less paperwork, and funding within days rather than weeks or months.
While options for financing are important, one potentially troubling finding from the survey is the seeming lack of awareness that small business owners have about rates. Nearly half say they are looking for more competitive rates when shopping around for financing. Unfortunately, many alternative lenders have very high rates, with APRs of 50 percent or more. Here's a look at more of the details of Balboa's report.