Click, Submit 2.0: An Update on Online Lender Applicants from the Small Business Credit Survey

This study presents an analysis of data from the 2018 Small Business Credit Survey. The findings shed light on the types of small firms using online lenders, their application experiences, and credit outcomes. Among the main findings: Firms that apply at online lenders are more likely to be smaller, have lower credit scores, report more financial challenges, and be less profitable than firms that apply at only traditional lenders. In addition, black-owned and Hispanic-owned firms are more likely than white-owned and Asian-owned firms to report they applied at an online lender. Furthermore, online-lender applicants are more likely than traditional-lender applicants to apply for smaller amounts of financing and to seek funding to cover operating expenses. Finally, online-lender applicants reported greater success obtaining credit than traditional-lender-only applicants, despite having lower credit scores, and they are less satisfied with their lenders.