Online lenders are not affected much by federal interest rates, as marketplace lenders don’t use the prime rate as a benchmark. But by association, it could affect demand for loans, credit performance and capital supply as the Fed rates play with investors’ expectations of yield. A small increase in rates wouldn’t have affected the industry too adversely.
However, the upcoming election might be a different story. 60% of small business owners think that the outcome of the presidential election will have an impact on small businesses, according to a survey conducted by Capify, a business financing company based in New York. 29% said it could possibly have a severe impact. Only 24% of small business owners say that Hillary Clinton is the presidential candidate that has their best interest at heart. 53% selected Donald Trump. Trump has proposed moratorium on new financial regulations, stating, “Under my plan, no American company will pay more than 15% of their business income in taxes.” Trump’s statements could be a deciding factor in how small business owners and those employed by alternative financial companies vote. Lower taxes and a timeout on regulations have the potential to resonate far and wide.
Hillary Clinton acknowledged online lending in her plan to help small businesses. “Small businesses owners cite insufficient access to capital as a primary inhibitor to starting, growing, and sustaining a small business,” she asserted in a fact sheet posted to her website. According to the site, she wants to harness the potential of online lending platforms to work towards safeguarding against deceptive lending practices, to streamline regulation, and to cut red tape for community banks and credit unions. Clinton’s plan for small business growth is focused on community banks, the SBA, and tax incentives. Fintech and marketplace lenders were not mentioned. With taxes and government red tape at the top of their list of grievances, this election will be quite an interesting one for small businesses and the alternative finance industry.
Content sourced from DeBanked. Click here to read more.