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Banker's Guide to New Small Business Finance: Venture Deals, Crowdfunding, Private Equity, and Technology, + Website


Praise for Banker’s Guide to New Small Business Finance

Banker’s Guide to New Small Business Finance provides a comprehensive overview of the changes in small business lending and identifies the impact these changes will have on the banking industry. Mr. Green accurately pinpoints the need for lenders to embrace innovative technologies to be successful going forward and describes best-of-breed technologies currently available.”
—Pierre Naudé, CEO, nCino

“Charles’s guide to the new world of small business finance is arguably the most relevant book on the subject currently available. He manages to cover just enough history to accurately frame where this dynamic and complex industry segment is today and where it is likely going.”
—Nic Perkins, CEO, Perkins Industries; Co-Founder, Receivables Exchange

“As publisher of the most widely-read daily newsletter to small business lenders in the country, I’ve tracked the emergence of innovative lenders over the past several years. There is a true disruption in the marketplace being caused by these lenders through their use of technology to acquire clients, qualify credit, perform due diligence, and fund loans with minimal human intervention. In this timely, well-written book, Charles puts this accelerating evolution of Main Street lending in context so that small business bankers will clearly understand how this new breed of lenders will positively, and negatively, change the world of small business lending.”
—Bob Coleman, Publisher, The Coleman Report

“Charles has done an outstanding job at reviewing the evolving landscape in small-business lending since the Great Recession. He has dug into the problems that traditional banks are confronting in dealing with lending to America’s small businesses and explained the emerging landscape of new players who have emerged to fill the void. This book is a must read for anyone interested in the landscape of small business finance.”
—Ami Kassar, CEO, Multifunding LLC; Debt financing writer for Wall Street Journal and Inc. Magazine

“Through the eyes of a savvy businesses lender, Charles Green looks back at the financing industry’s blunders and forecasts the direction it must take to survive and thrive—a must read for bankers, financiers, and even business owners seeking creative financing. He looks at and evaluates the emerging sources of debt and equity that bankers and entrepreneurs have to master today if they expect to be around tomorrow.”
—Jerry Chautin, SBA’s 2006 “National Journalist of the Year;” business columnist and former business lender

“The Banker’s Guide to New Small Business Finance offers a sound, balanced assessment from a banker’s perspective of the digital revolution that has been redefining the business financing sector. The author paints a broad picture of the economic and technological trends that have come together to create a new reality for business finance, a reality that gives both borrowers and lenders a stunning array of choice and flexibility.”
—Terry Robinson, CEO, Sunovis Financial, Inc.

CHARLES H. GREEN is a seasoned finance professional with over 30 years of experience advising, financing, and investing in the small business sector. His experience includes tenure as a commercial banker and venture capitalist. He also founded and served as President and CEO of Sunrise Bank of Atlanta. He regularly consults with business owners and bankers, writes about financial topics, and teaches finance through seminars and conferences produced by the enterprise he founded, the Small Business Finance Institute (

Figures and Tables xi

Preface xiii

Acknowledgments xix

About the Author xxi

Part One: Survey of Funding Small Business 1

Chapter 1: How Small Businesses Are Funded 3

Defining Small Business 3

ABCs of Small Business Funding 8

Usual Suspects Providing Business Capital 10

The Rise of Alternative Financing 12

Chapter 2: Elusive Nature of Bank Funding 15

Risk Appetite Is an Oxymoron 16

Source of Bank Funding Limits Its Use 17

Small Business Credit Is Difficult to Scale 19

Loan and Bank Size Are Inversely Related 20

Chapter 3: Capital Market Disruptions, Post-2008 23

Didn't Anyone See Bubble Coming? 23

This Time Was Different 25

Where Did Main Street Funding Go? 29

SBA--Main Street's Federal Bailout? 30

Supply versus Demand--Did Anyone Ask for a Loan (and What Was the Answer)? 33

Post-Crisis Reflections on Financial Regulation 37

Part Two: A Perfect Storm Rising 43

Chapter 4: A Paradigm Shift Created by Amazon, Google, and Facebook 45

Amazon Creates Digital Trust 46

Who Answered All Those Questions Before? 49

Your Opinion Is (In)valuable 51

How Do These Changes Affect Small Business Lending? 54

Chapter 5: Private Equity In Search of ROI 59

The Fed's Low Interest Policy and the Effects on the Private Investor 60

Wall Street Isn't Main Street 60

First Buy In, Then Invest Up 62

A Cautionary Note about a 72 Percent APR 67

Chapter 6: First Change the Marketplace, Then Change the Market 71

Old Thinking/Technology Can Stifle Credit 72

Morality and Money 78

The Unintended Consequences of Old Law 79

Capital Markets Go Digital 81

Pattern Recognition--Data Is the Game Changer 82

Different Processes and Different Views 84

Crowdfunding versus the Crowd That Got Funding 86

The Rise in Alternative Paths to Source Funding 88

Billions Went Missing and No One Noticed? 89

Part Three: Digital Dynamics in Small Business Funding 93

Chapter 7: Funders and Lenders--Online Capital Providers 95

Innovative Funding Marketplace 95

Online Funders: Purchasing Future Receipts 97

Online Lenders: Money from the Cloud 106

Chapter 8: Crowdfunding with Donors, Innovators, Loaners, and Shareholders 125

Donors--Funding Arts, Solving Problems, and Floating Local Businesses with No Strings Attached 125

Innovators--Buy It, I'll Build It 133

Loaners--Brother Can You Refinance My Visa? 135

Shareholders--Online Market for Equity 140

Crowded Elevator? 147

Chapter 9: Other Innovative Funding Sources on the Rise 151

Factoring in the Digital Age 151

Working Capital Management as a Financing Strategy 156

Investing Retirement Funds in Self, Inc 157

No Store, No Hours, No Bank, No Problem--Virtual Lenders for Virtual Merchants 160

Taking as Much Time as Needed to Repay 164

Chapter 10: Capital Guides--Online Resources to Find, Coach, and Assist Borrowers and Lenders 167

Loan Brokers 168

Other Online Resources 174

Chapter 11: What Innovation Means for Bank Lending 177

Competition Erodes Banks' Share of Small Business Loans (Again) 178

What Banks Can Fund (but Won't) versus What Banks Cannot Fund (but Will) 180

The Best Defense Is Still a Good Offense 182

Banks Still Have the Most Customers and Cheapest Bucks in Town 184

What's Next? Character Redux, Rise of Alternative Payments, and? 186

About the Companion Website 191

Index 193