In April, the U.S. economy reported a 3.2 percent growth rate in the first quarter of the year -- a significantly faster pace than the 2.1 percent economists were expecting. This comes alongside other encouraging factors like strong consumer spending and low unemployment. Lindsey Bell, an investment strategist from CFRA, says that in the wake of good earnings "economic data has been pretty decent" with jobless claims at a 50-year low and retail sales that were much better than expected.

When you take job creation and revenue generation, it is eye-opening to learn that small and medium-sized businesses make up 75 percent of new jobs and generate 50 percent of the nation's revenue. That's an astonishing proportion. It's no wonder that in its March report, the NFIB pointed out a positive sentiment among businesses. "Small business owners continue to create jobs, expand their operations, and are enjoying strong sales," said NFIB President and CEO Juanita Duggan.

This growth mostly comes in the form of investment in equipment and capital mostly among wholesale trades (36 percent), manufacturing (34 percent), retail (33 percent), and transportation (32 percent). Although there is growth entrepreneurs and SMBs still face the lack of access to capital. Many companies are turning to non-bank lending, a growing trend where corporations are creating and offering financing solutions to business owners. 

Pitney Bowes is one of the old companies that has launched a new business unit called Wheeler Financial, for lending solutions geared towards expansion and business growth. Wheeler will be focused on asset-backed lending, which will help businesses purchase new equipment and services critical to the industries in which they operate. 

Small business loans have been declining for ten consecutive quarters, while banks with $100 million of assets or less decreased by 79 percent between the years 1998 to 2018. According to the most recent National Center for Middle Market Indicator, 71 percent of businesses surveyed are already planning to invest extra cash into their business. "We understand our client's needs for capital are growing," Christopher Johnson, Senior Vice President and President, Pitney Bowes Financial Services said when we spoke. "The market's ability to meet that need is shrinking. With the launch of Wheeler Financial, we are committed to investing in our clients' growth by helping them acquire the assets essential to their business operations. We need SMBs in the economy, and it is essential to allow them and the entrepreneurs out there to continue to thrive despite today's volatile conditions". 

New entrants in the lending market like Pitney Bowes aren't the only option for small business owners in need of loans, however.  Online lending company Currency offers potentially attractive rates for qualified borrowers looking for between $5,000 to $2 million. Publicly-listed OnDeck Capital also offers fast loans for a slightly higher annual percentage rate, when the speed of the loan is a priority. Other alternatives to these include private lenders backed by the U.S. Small Business Administration, which not only facilitates loans but provides complementary services such as counseling and education.

Nevertheless, my guess is that in the near future we will see other companies like Pitney get into lending and financing capital.

Published on: Apr 30, 2019
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