Clicking for Credit: Experiences of Online Lender Applicants from the Small Business Credit Survey

This report presents findings on the experiences of small businesses seeking credit from online lenders, based on data from the 2021 Small Business Credit Survey (SBCS). According to findings, firms that apply to online lenders are more likely to be newer and have fewer employees, lower revenues, and weaker credit scores. In addition, Black- and Hispanic-owned firms are more likely than white- and Asian-owned firms to report that they applied to an online lender. Furthermore, contrary to prior SBCS findings, online-lender applicants were less likely than bank applicants to be approved for the full amount of financing they sought. Generally, online-lender applicants reported lower overall satisfaction with their lenders than did bank applicants. Overall, approved applicants cited fewer challenges with their lender experiences than did applicants that were denied. The only exception was at online lenders, where approved applicants were more likely than denied applicants to cite challenges with high interest rates and unfavorable repayment terms.