Despite a volatile U.S. Presidential election and the upcoming holiday season, a majority of small business owners are optimistic about their prospects, according to Chase's2016 Fall/Winter Chase Business Leaders Outlookreport released Thursday.Approximately two-thirds of the almost 900 small business owners in the survey said they are optimistic about their businesses in the next year, and 55% felt the same about their industry as a whole. But just 49% were optimistic about their local economies and 42% about the national economy.Hispanic business owners are seemingly even more optimistic than their peers, as 87% expect revenue and sales to increase and 81% expect profits to rise in the next year.Most small business owners are still bullish about their own growth, just as they were in our spring survey, said Laura Miller, president of U.S. Small Business for Chase Commerce Solutions. With the holidays approaching, most predict increases in online sales, and almost half predict their customers will spend more this year.Furthermore, 59% of small businesses expect more holiday online shopping purchases compared to last year, and 46% expect customer spending to increase. Meanwhile, 65% are optimistic about their own company's performance.Finally, 59% of small business owners plan to borrow this year, up from 52% in 2015. As for the source of this funding, it's a tie at 37% between banks/credit unions/traditional lenders and business credit cards.Small businesses represent 99% of US companies, 54% of total sales, and 55% of all jobs, according to the US Small Business Administration.These businesses need capital in order to grow, but small businesses are underfundedonly half of small businesses with $100,000 to $1 million of annual revenue received at least some of the financing they applied for from large banks in late 2015. This is partially because banks have retreated from this segment because issuing loans to small businesses using the traditional underwriting model is expensive. This leaves a massive amount of unfulfilled loans that we estimate reached $96.5 billion in Q4 2015.Alternative lending companies have stepped in to capitalize on the opportunity available in helping meet more small business' lending needs.Alternative small business lending platforms use machine learning and digital tools to extend credit to a wide array of small businesses quickly and efficiently, particularly to those that have been rejected by banks. Alternative small business lending companies provide digital platforms that connect small business borrowers to capital using nontraditional means.We estimate that alternative small business lenders originated $5 billion and had a 4.3% share of the small business lending market in the US in 2015. But alternative small business lending platforms will originate $52 billion and gain a 20.7% share of the total market by 2020, driven by the continued growth of new players, increased borrower awareness and interest, and most importantly, major partnerships with big banks.Evan Bakker, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report onsmall business alternative lendingthat analyzes the market opportunity for alternative lenders, forecasts the market share and volume growth of alternative lending platforms, profiles key players, and addresses the main industry risks.Here are some key takeaways from the report:Alternative lending platforms are in a position to capitalize on this underfunding and also take share from banks. These companies use machine learning and digital tools to extend credit to a wide array of small businesses quickly and efficiently. We estimate that alternative lending companies' share of the small business lending market in the US will reach 20.7% by 2020.Alternative lenders are now partnering with banks and this will propel growth going forward. New lenders are finding opportunities to offer white-label services to major banks. We expect banking partnerships, like the one between JPMorgan and OnDeck, to add 7.7 percentage points to the alternative lending industry's market share by 2020.A flurry of new lenders have entered the market, but it's still early innings. A handful of small business lenders, from Funding Circle to Credibly, have entered the market and this is creating challenges as customer acquisition costs rise and alternative lending companies struggle to differentiate themselves.In full, the report: Forecasts the market share and volume growth of the small business alternative lending sector, and breaks down the main growth drivers.Explains why small businesses are underfunded, and quantifies the market opportunity for alternative lenders.Defines the different types of platforms that alternative lenders employ, including their revenue models.Lists the advantages and disadvantages that alternative lenders have compared to traditional players.Overviews the key players in the industry and identifies their growth factors as well as the pain points limiting their growth.Pinpoints the key risks that could undermine the success of alternative platformsTo get your copy of this invaluable guide, choose one of these options:Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIPPurchase the report and download it immediately from our research store. >> BUY THE REPORTThe choice is yours. But however you decide to acquire this report, youve given yourself a powerful advantage in your understanding of small business alternative lending.Join the conversation about this story
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