The Rise of Finance Companies and FinTech Lenders in Small Business Lending

Gopal, Manasa; Schnabl, Philipp

doi:10.2139/ssrn.3600068

Cited by 19 publications

(25 citation statements)

References 43 publications

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“…However, the SSBF has not been conducted since 2003. 11 Meanwhile, in the last two decades, the financing sources of small businesses have significantly changed, with a decline in bank lending and a rise in nonbank sources of financing such as finance companies and FinTech lenders (Gopal and Schnabl, 2020). Our survey contributes by providing a timely snapshot of small business finances.…”

Section: Contributionmentioning

confidence: 99%

The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

et al. 2020

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We analyze a large-scale survey of owners, managers, and employees of small businesses in the United States to understand the effects of the early stages of the COVID-19 pandemic on those businesses. The survey was fielded in late April 2020 among Facebook business page administrators, frequent sellers on Facebook's e-commerce platform Marketplace, and the general Facebook user population. We observe more than 66,000 responses covering most sectors of the economy, including many businesses that had stopped operating due to the pandemic. The survey asks 136 questions covering topics such as changes in business operations and employment, changes in financing patterns, and the interaction of household and business responsibilities. We characterize the adjustments implemented to survive the pandemic and explore the key challenges to continue operating or to reopen. We show how these patterns differ across industry, firm size, owner gender, and other firm characteristics.

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Section: Contributionmentioning

confidence: 99%

The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

et al. 2020

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“…The main reason for this small effect is that banks in particular the largest ones --are not lending much to small businesses, as noted by Chen, Hanson, and Stein (2017) and Gopal & Schnabl (2020). This is due to the rise of non-banks, notably Fintech, which have replaced bank lending over the past few years.…”

Section: Corporate Debt Restructuring Will Have a Small Effect On Ba K Bala Ce Heementioning

confidence: 99%

“…loans ha e al a s been a small frac ion of U.S. banks balance shee s, and also beca se non-banks have taken over this market since the financial crisis (see e.g. Gopal and Schnabl, 2020).…”

Section: Moratoria and Payment Deferrals Programs For Smesmentioning

confidence: 99%

Sizing up Corporate Restructuring in the COVID Crisis

Greenwood¹,

Iverson²,

Thesmar³

2020

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for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed additional relationships of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w28104.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…The results of Gopal and Schnabl (2020) support a substitution effect due to the reduction in the supply of credit by banks. They find increased lending by non-bank lenders, especially independent finance companies, which almost perfectly offsets the reduction in bank lending in the aftermath of 2007-2009 financial crises.…”

Section: Literature Reviewmentioning

confidence: 68%

“…Using aggregate debt offering at the regional or country level, several papers suggest FinTech took over traditional financial intermediary market share when it comes to business lending (See Gopal and Schnabl (2020), Balyuk, Berger, andHackney (2020), andCortés, Demyanyk, Li, Loutskina, andStrahan (2020). Large banks reduced the lending to small businesses as they faced strong regulatory burdens and losses, leaving room for FinTech lenders.…”

Section: Introductionmentioning

confidence: 99%

How Does Peer-to-Business Lending Affect Financial Policy of SMEs?

Eça¹,

Ferreira

Prado

et al. 2021

SSRN Journal

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We study how alternative sources of financing, Peer to Business (P2B) platforms, affect the financial policy of small and medium-sized enterprises (SMEs). We find that firms obtaining P2B loans are higher quality firms as they are large, more profitable, with higher sales growth, higher bank debt, and lower default rates. We conclude that P2B platforms are serving the same type of firms than traditional banks. While P2B loans do not seem to affect investment policy and performance, it does affect financial policy. Firms use the availability of P2B to reduce long-term bank debt, while they increase short-term bank debt following P2B lending. In addition, SMEs increase the number of lending relationships and reduce their dependence on a single bank, in particular those with less stable funding and lower liquidity. Our findings suggest that FinTech lending complements the debt financing choices of SMEs and allows them to diversify away from traditional banks.

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The Rise of Finance Companies and FinTech Lenders in Small Business Lending

Cited by 19 publications

References 43 publications

The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

Sizing up Corporate Restructuring in the COVID Crisis

How Does Peer-to-Business Lending Affect Financial Policy of SMEs?

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