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Mantvydas Štareika, CEO at CapitalBox, discusses the evolution and growth of the alternative financing industry, which has matured significantly in recent years. Alternative lending, also known as non-bank lending, has gained momentum and demonstrated its staying power, with a significant increase in market volume and adoption. The expansion of alternative lending products and improvements have enabled alt lenders to address funding gaps, particularly for small- and medium-sized enterprises (SMEs) that traditional banks are hesitant to serve.

The incorporation of collateral lending has been a significant milestone in the alt-lending sector, providing SMEs with the capital needed to grow. While collateral lending is not a silver bullet solution, it has expanded the options available to SMEs in need of financing. In addition to collateral lending, factoring is another method that allows companies without collateral to obtain investments based on the strength of their buyers. Alt lending depends on a combination of these methods, as no single product can compete head-on with traditional finance institutions.

To continue moving alt finance in the right direction, Štareika emphasizes the importance of expanding and improving basic offerings like collateral lending, rather than solely focusing on new features and innovation. By broadening the criteria accepted as collateral and innovating within existing factoring and collateral services, alt lenders can position themselves as a viable alternative to traditional banks. It is essential for the industry to maintain a balance between traditional lending products and innovation to sustain its growth and competitiveness.

Alt lending has faced criticism for making quick changes and trend-hopping, but its growth and success have been attributed to a more cautious approach. By focusing on what works and not fixing what isn’t broken, alt lenders have been able to establish themselves as a reliable option in the financial market. The key to future success lies in continued dedication to existing offerings and incremental innovations that improve the accessibility and effectiveness of alternative financing for SMEs. Alt lending must remain focused on providing a range of services that can meet the diverse needs of businesses seeking financing.

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