ATLANTA-The profitable small business market has been drawing various non-traditional lenders into the competition for the credit business of this important segment. According to a recent survey this could constitute a significant threat for traditional lenders.

The appeal of various types of non-traditional lenders is explored in the survey, "Competing in the New Small Business Credit Market," from SYNERGISTICS RESEARCH, which found that more than half of small businesses would consider some type of non-traditional organization for their lending needs.

More than one-quarter would consider credit from a building supply company like Home Depot or Lowes, an office supply company like Staples, or a computer company like Dell. One-fifth of respondents reported they would be willing to obtain credit services from an auto manufacturer such as Ford Motor Credit, UPS Capital, or Federal Express.

What should be particularly disturbing to traditional providers, according to SYNERGISTICS, is the significant number of credit prospects (those small businesses that will obtain or add to credit in the next year) who express interest in obtaining credit from non-traditional sources.

As shown in the chart, seven in 10 of those who are likely to add to or obtain credit in the next year would consider one of the non-traditional lenders tested. Response to computer companies and building supply companies is strongest.

"The appeal of these new competitors could have its basis in the recent tightening of lending standards traditional providers imposed in reaction to the credit crunch," said Gene M. Driskill, COO of SYNERGISTICS. "In addition, other new entrants such as Internet-based lenders and online social lending sites are also vying for a piece of this lucrative market."

The study is a reminder to credit unions that they have more than just banks and other financial services providers as competition.

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