For small business, a lot of lending is moving online

Logo_Harvard_Business_ReviewWe’ve read multiple stories recently (here are just a few one, two, three, four…) about small business lenders accomplishing astonishing numbers with online lending platforms. In our research we’re finding that this new money appears easy to get (the online applications and due diligence are relatively simple), but the price is steep (annualized interest rates of up to 70%).

Problem is, small businesses have fewer financing options now then in the last decade. Indeed, small businesses have suffered 3 ways when it comes to acquiring capital they need to grow. According to the Harvard Business Review:

  1. “A decades-long trend toward consolidation of banking assets into fewer institutions is eliminating a key source of capital for small firms….”
  2. “…collateral owned by small businesses lost value during the financial crisis, potentially making small business borrowers less creditworthy today…”
  3. “In the recent recession, small-business sales were hit hard and may still be soft, undermining their demand for loan capital…”
  4. “…. tightening on loan terms, including the Federal Reserve Senior Loan Officer Survey, for small businesses increased at double-digit rates during the recession and recovery, and have eased at just single-digit rates over the past several quarters. Loosening has been much slower and more tentative for small firms than for large firms…” (italics added)

Despite the low barriers to lending, these expensive online lenders are not a sustainable solution to small business borrowing needs. What’s often overlooked in this discussion of small business loans are SBA loans. SBA loans are available from banks and non-bank lenders to American small businesses that “can not get credit elsewhere” (small businesses that are underserved by traditional lenders) at competitive rates (about 6%) with an SBA guarantee.

~ Norris Lozano

CEO of BusinessUS

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Narcissism or Humility: which is likely to help a CEO lead?

Marillyn Hewson, chairman and CEO of Lockheed Martin CorpThe Dean Australia’s Macquarie Graduate School of Management (MGSM) in Sydney Australia has authored a study of the level of narcissism as a leadership trait among CEOs at the USA’s top 100 companies, as  a first step in investigating narcissism as a leadership quality and predictor of company performance.

As reported in the Washington Post, “Ranking the CEOs in his sample by that metric, he was able to compile a list of apparent CEO humility that named Pat Gelsinger (CEO of VMware), Gregg Steinhafel (CEO of Target) and Omar Ishrak (CEO of Medtronic) as the three least narcissistic by that metric.” (3 of the top 10 are women).

Alex Frino, the dean of Macquarie, was careful to point out a Harvard Business Review Study (2000) demonstrating the value of a certain level of narcissism, especially in rough economic times. That Harvard study by Michael Maccoby, and another by IMD Business School, Penn State, and Erlangen-Nuremberg University, provide evidence that narcissism is valuable at the top.

On the other end of the spectrum, the Harvard Business School’s Dean, Nitin Nohria, is quoted in Businessweek that humility is a more prized leadership quality.

Curious what you think is more important in a CEO: narcissism or humility?

~ Norris Lozano, CEO of BusinessUS