Treasury Secretary Jack Lew encouraged alternative measures for small businesses to obtain credit during a speech given on Monday at the Capital Access Innovation Summit.
Lew said small businesses and start-ups are struggling to obtain credit in the post-recession years and the best way to fill the credit gaps are through new financial models that determine creditworthiness.
The suggested approaches for small businesses applying for credit include using data like real-time shipping schedules, records held in a business’ accounting software and social media traffic to access credit.
Small businesses currently report information including, employee rolls and business expenses to the government. Lew said with even greater access to information, the government can help business owners supply creditors with the information needed to distribute more loans.
“This concept is central to the administration’s Open Data initiative, which is allowing both consumers and small businesses to take ownership of their own data, while rigorously safeguarding privacy, confidentiality and security,” Lew said. “As we have heard today, this points to a potential area for us to explore so that we can continue to help eliminate barriers.”
Lew finished his speech with a request for large companies to continue investing in small businesses and start-ups.
“When Dow invests in start-ups, when corporate executives at the New York Stock Exchange mentor entrepreneurs and when IBM uses small businesses as suppliers, it makes a real impact,” Lew said.