With inflation making the headlines, businesses are looking for alternatives to traditional loans. At the same time, banks and other lending institutions want to expand their offerings.
How Inflation Impacts Businesses
Inflation can impact businesses in a couple of ways. First, if the cost of raw materials and labor expenses increase, businesses are forced to raise prices to preserve their margins. This can sometimes cause a decrease in sales. Second, when inflation exists, the Federal Reserve will usually attempt to balance the equation by raising interest rates. Businesses with existing loans suddenly find they are paying more on their installments, while entrepreneurs in need of financing become hesitant to take out loans because of higher interest rates. Businesses across the United States witnessed this in 2017 and 2018 when the Fed raised interest rates multiple times, thus negatively impacting the economy.
How Inflation Impacts Banks
Inflation directly affects banks as well. When interest rates go up, retention becomes a challenge, as does the ability to bring in new business clients. With businesses seeking financing solutions that fall outside of traditional loans, how can banks capture that segment, retain existing business clients, and grow their portfolios at the same time?
Solutions for Businesses and Banks
The best way to ease inflation worries is to find a solution that works for both banks and businesses. There are many alternative lending programs out there, but not all of them are credible, reliable, or affordable from a business perspective. At the same time, traditional lending programs do not have programs small businesses need such as equipment leasing, working capital, and more. To find a middle ground, banks can expand their offerings by partnering with secure and reputable indirect lenders that can provide solutions that fit what their clients need and what new clients are seeking. The result is improved retention, satisfied business borrowers, and growth from new clients who can easily find solutions from banks, with a minimized risk of turndowns.
At Web Finance Direct, we offer bank services to match clients with the financing programs they need. As an indirect lender, we specialize in building strong partnerships with banks so they can expand their offerings to business clients. Put your inflation worries aside, and contact Web Finance Direct today.