Bank of America Brings Small Business Lending to Mobile
Case in point: earlier this week Bank of America announced small business customers would now be able to use the B of A mobile app to apply for Business Advantage Term Loans or Business Advantage Credit Lines. This comes as the bank already boasts 1.3 million small business customers who currently use the app, which marks a year over year increase of 14%. In a statement by B of A’s head of Small Business Banking, Sharon Miller, she said, “Our new small business mobile lending experience delivers a convenient, on-the-go solution to meet the needs of today’s busy entrepreneurs. Our high-tech, high-touch approach provides our three million small business clients the capability to bank how, where and when they want – including applying for financing anywhere, at any time. This is another way we are providing a competitive advantage for our clients.”
What’s interesting about Bank of America’s mobile push is that puts them in greater competition with online-only and other alternative lenders who have long positioned themselves as an easier and better source of financing. This is no fluke as B of A has recently put emphasis on other FinTech solutions such as peer to peer (P2P) payments, even reporting that their customers made 25 million P2P transfers in 2016. Of course, just adding mobile support for small business loans is no guarantee that Bank of America or other institutions will be able to compete with the transparency or efficiency that many online lenders offer, although it may now be easier for entrepreneurs to compare loan rates between big banks and FinTech lenders.
The addition of small business loans to B of A’s mobile app also jives with another trend: the increasing loan approval rates at big banks. According to the latest report from Biz2Credit, the average small business loan approval rate among big banks now sits at 24.3 — up a full point in the last year. That may be at least partially due to the Fed’s steadily increasing interest rates, giving banks more financial incentive to lend but could also point to a change in how these institutions view small business customers.
Overall Bank of America’s decision to let small business clients apply for loans and lines of credit from their mobile devices is a positive move for a number of reasons. First it once again shows that big banks are finally interested in lending to entrepreneurs again after the financial crisis of 2008 mostly halted such activities. Secondly it highlights a FinTech streak that many institutions are adopting and that can help make banking easier for millions of consumers. So while the actual functionality of B of A’s new loan platform will need to be tested, it’s mere existence is a promising development for small business owners in need of capital.