Amex boosts SMB lending

The loans, which will range from USD 1,000 to USD 750,000 and carry terms up to 90 days, will allow applicants to be approved in “minutes” and have a two-day deposit. The company recently partnered with small business-focused lending marketplace Lendio to offer longer-term loans to small businesses.

Small businesses are becoming a popular target for lenders because of their strong potential to become lucrative.

When offered funding options, small businesses take advantage of them. Square Capital advanced USD 400 million to clients in Q4 2015, much of which was invested in long-term business improvements. For payments companies, that means that a small working capital loan can help a business improve its performance in the long-run. Higher performing businesses generate more revenue for payments companies, which makes these types of loans a strong investment.

Amex could be banking on brand awareness and established reputation to win customers. Amex has been working to extend relationships with small businesses through its OptBlue program, which makes it easier for small business merchants to accept Amex cards. Once Amex has onboarded a small business, it can then market additional services, like working capital, to that business, which could generate revenue for Amex. And Amex’s vast amount of experience lending credit could appeal to the firm’s clients over other options, especially as the online lending industry struggles.

And catering to small business clients could help the company recoup following Costco losses. In 2015, Costco cards represented 8% of Amex’s global billed business and 20% of the firm’s outstanding loans. That’s a substantial loss for Amex. But investing in small businesses, as well as in services like working capital that might help those businesses strengthen their sales in the long term, could help Amex cultivate additional revenue with potential to mitigate those losses.