Do Small Business Loans Generate Significant Returns?
Originally @ Newfination Editor’s note: Nik Milanovic is the head of business development & marketing analytics at Endurance Lending Network . He is also a Newfination Expert in crowdlending. A recent blog post by Lend Academy founder Peter Renton on Lending Club’s entrance into the small business lending market brought up a too-familiar question: do small business loans underperform consumer loans? The concept of small business loans generating abysmal returns is a common misconception among peer-to-peer investors. But where does this myth come from? And what evidence is there to the contrary? If you look only at peer-to-peer lenders focused on consumer loans, it’s easy to walk away thinking business loans are too risky to generate positive, reliable returns. Nickel Steamroller , which provides analytics and insights on the ROI of peer-to-peer lenders Lending Club and Prosper , highlights this issue. Over Lending Club’s historical performance, for instance, small b