What Small Businesses Want

Where is the gap in access to credit for small businesses? The biggest credit shortage is for small loans, those under $250,000, and especially under $100,000. Unfortunately, this is the size loan that most—over 70%—small businesses want. The problem is greatest for the youngest and smallest firms, which are less likely to possess the information lenders need to establish creditworthiness. Moreover, the standard bank loan application process is long and tedious, and small businesses are notoriously strapped for time. This chapter explores why small businesses need capital, what they are seeking from their financial services providers, and how to achieve the right customer-product fit. It also discusses the lack of innovation by banks in the small business customer experience, and how early fintechs began to change the game.