10 Fintechs That Are Transforming SME LendingFebruary 2, 2023 0 comments
Small and medium enterprises (SMEs) are innovative, agile and drive competition. However, they’re often shuffled to the back of the line when it comes to accessing credit.
Lending to SMEs can be risky and time-consuming. Traditional financial institutions often require paperwork-heavy application processes and may find it difficult to execute credit risk decisioning without human intervention.
Forty-four percent of SMEs need funding immediately to meet operating expenses, and 56% look to credit to grow their business.
But when accessing credit quickly can mean the difference between a business flourishing or floundering, what are the options?
Increasingly, disruptive lenders, including fintechs and neobanks, are ensuring that SMEs can access credit when they need it.
These 10 global innovators are up for the challenge of credit risk decisioning for SMEs.
UK-based fintech OakNorth delivers instant credit analysis and real-time portfolio insights focused on transforming commercial lending. The co-founders of OakNorth were repeatedly rejected for SME loans themselves, prompting their creation of a robust, sustainable bank and software that enables others to lend to previously underserved SMEs.
NeoGrowth Credit is a tech-enabled business that offers unsecured loans to small retailers in India. Combining traditional and alternate data for more accurate credit scoring, NeoGrowth also offers dynamic repayment terms and automated collections processes to help identify the most creditworthy customers. Their mission is to help small business owners drive growth that matches their ambitions.
Selected for the 2019 Forbes Fintech 50 startups list, Kabbage (now owned by American Express) provides SMEs with credit by evaluating business-focused alternative data like accounting info, online sales and shipping. With a nuanced understanding of performance, Kabbage is able to offer flexible credit options in real time.
In 2016, Banco Pichincha – Ecuador’s largest bank – received a credit line of US$55 million from the International Finance Corporation to finance loans to women-owned SMEs. They doubled down in 2019 when they signed an alliance with the Overseas Private Investment Corporation and Wells Fargo for a combined loan of US$108 million to support loans to SMEs in the region that are owned, led by or support women.
Claiming that SMEs have often been left behind by the ‘big banks,’ Allica Bank combines modern technology with local relationships to ensure SMEs have the tools and the funding they need to operate. Based in the UK, Allica Bank offers SMEs asset financing, with up to £1 million worth of flexible financing options.
Australia’s only challenger bank built specifically for SME lending, Judo Bank seeks to bring back the lost art of relationships in business banking. They brand themselves as a ‘genuine alternative’ for SMEs who want quick access to not only funds, but the superior customer experience they deserve.
Based in the Philippines, First Circle’s mission is to enable SMEs to achieve their full potential through fast and flexible financial partnership. Their customers often have no credit data or fixed collateral and as a result are excluded from the traditional banking sector. First Circle allows these SMEs to secure funding in as little as a day through an automated, digitized application process.
Sixty percent of South African businesses find it difficult to access the capital necessary to grow their business, due to long wait times, painful paperwork requirements and the necessity of high collateral. Lulalend uses AI to score creditworthiness instantly, ensuring small business owners are able to receive funding within 24 hours of applying.
Argentinian Siembro uses AI to power their in-house loan algorithm, which enables instant loan approvals for the over 1.5 million small and medium farm businesses in the country who have limited access to credit. Siembro focuses on ensuring corn, wheat and soy farmers obtain the funding they need to survive.
A startup whose founders noticed that small businesses were shut out of access to much-needed credit, iwoca is one of the fastest-growing business lenders in Europe. With a goal of funding one million small businesses, iwoca wants to ensure that SMEs have more time running and growing their business instead of filling out endless paperwork and waiting for approvals.
Faster Loan Approvals
How can these organisations do what larger, traditional lenders can’t? They’ve embraced digital technology, data, and advanced analytics like machine learning to simplify and digitally transform the application process.
AI-powered credit decisioning provides accurate, real-time approvals, allowing SMEs to access funds quicker than ever before. With better data, the offers are more flexible and personalised to each business’s unique needs.
Now, automated data collection, risk decisioning, and pricing, accelerates approvals and ensures funding within a matter of only days – or even hours.
Learn how to build similar world-class SME lending experiences with this e-book from Provenir here.
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