Private Lenders Fill Financing Gap for Small Businesses as Banks Retreat

Small and midsize businesses are increasingly turning to private lenders like VOX Funding due to traditional banks stepping back from serving their needs, according to CEO Adam Benowitz. Non-bank lending has become more normalized, with businesses seeking fast, flexible, and creative financing solutions tailored to specific industries.

Benowitz explained that VOX Funding's approach combines customer focus with advanced technology and data science to expand capabilities and responsiveness. The company has retained its customer focus and commitment to caring about the small business community while increasingly utilizing technology and data science to expand its reach. This evolution allows the company to scale while meeting client needs more efficiently, though Benowitz cautioned that technology alone is not a differentiator as it becomes commoditized.

The current economic landscape, marked by interest rate spikes and supply chain disruptions, has made financing particularly challenging for small businesses. These conditions exacerbate existing difficulties, but private credit institutions are stepping in to fill the gap. Benowitz expressed excitement about the rise of private credit and innovation in financial products, noting tremendous creativity in how people are solving financial challenges today.

Looking ahead, Benowitz predicts that the alternative lending space will continue to grow, with industry-specific solutions prevailing over generalist approaches. Examples include tailored products for e-commerce or construction, with VOX Funding innovating with offerings such as an interest-only credit facility for small businesses. This focus on product innovation and data analytics, rather than solely technology, is key to staying competitive in a crowded market.

For HR vendors and talent management professionals, this shift toward private lending represents both challenges and opportunities. As traditional banking relationships become less accessible for small business clients, HR service providers may need to educate themselves about alternative financing options to better serve their customers. The growth of industry-specific lending solutions could also create new partnership opportunities between HR technology vendors and financial service providers seeking to offer integrated solutions to their shared client base.