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In 2014, 2.2 million businesses, located in low-income communities, sought credit while CDFIs originated just over 12,300 small business loans. Online small business lenders have stepped in to fill that gap, with multi-million dollar marketing budgets to bring in customers and a streamlined, repeatable process that leads to an enhanced customer experience.
They market themselves as quick and easy. Small business borrowers can apply and be approved for a loan over the internet in no time. Online lenders aren’t regulated, their numbers are growing and they are spending a large portion of their revenue to acquire new customers. How can Community Development Financial Institutions (CDFIs) possibly compete?