|
|
Perhaps most important small business loans often defined as business loans below million are considerably less profitable than large business loans for several reasons including Small business lending is riskier than large business lending. Small businesses are much more sensitive to swings in the economy have higher failure rates and fewer assets to collateralize. Assessing creditworthiness of small businesses can be difficult due to information asymmetry. Little if any public information exists about the performance of most small businesses because they rarely issue publicly traded equity or debt securities.
Many small businesses also lack detailed balance sheets use sparse tax returns and keep inadequate income statements. placed greater emphasis on relationships with borrowers in their underwriting processes but these relationships are expensive and have not in the past translated well to automated methods for assessing creditworthiness Chinese Overseas America Number Data which are favored by larger banks. Costs of underwriting small business lending are also high due to heterogeneity of small businesses and the lack of a secondary market. Heterogeneity of small firms together with widely varying uses of borrowed funds have impeded development of general standards for assessing applicants for small business loans and have increased costs of evaluating such loans.
Moreover the heterogeneity of small business loans has made it difficult to securitize and sell pools of small business loans in the secondary market. Transaction costs to process a loan are comparable to a million loan but with less profit. As a result banks are less likely to engage in lending at the smallest dollar level. Some banks particularly larger banks have significantly reduced or eliminated loans below a certain threshold typically or or simply will not lend to small businesses with revenue of less than million as a way to limit time consuming applications from small businesses.
|
|
|
|
|
|
|
|
|
|
发表于 2024-3-12 11:44:37
