‍

At Syh Strategies we have found the Federal Reserve's research to be an insightful source when analyzing the small business credit market. The Federal Reserve's Small Business Credit Survey provides valuable insights into credit trends, credit access gaps, small business performance, and compliance requirements. The 2022 survey is particularly important as we move further into the Post-Covid era. We've highlighted 3 key takeaways for Alternative / Online Lenders from the 2023 Report. You can also find a link to the full report below.

‍

‍

The data suggests that the approval rates for loans, lines of credit, and merchant cash advance applications have exhibited a year-over-year improvement. However, it is important to note that the proportion of fully approved applications still falls short of pre-pandemic levels. This is indicative of the inherent cyclicality and risk associated with the small business lending landscape. As such, a prudent approach to risk management is critical to navigating the volatility of the market.

‍

‍

The fact that firms continue to rely on pandemic-related financial assistance, albeit to a lesser extent due to its decreasing availability, is indicative of the fragility of the small business landscape. With the waning availability of government assistance, small businesses are likely to experience a heightened level of credit risk, as their capacity to meet their financial commitments becomes more precarious.

‍

‍

‍