Innovation in SME Lending
Micro, small, and medium enterprises (MSMEs) are the economic darlings of the economy. They’re innovative, agile and drive competition – not to mention create most of the jobs. However, they’re often shuffled to the back of the line when it comes to accessing credit. Why? Lending to SMEs can be inherently risky and incredibly time-consuming. Traditional financial institutions often require a paperwork-heavy application process 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% of SMEs look to credit to innovate and grow their business. And a full 98% of businesses in Australia are SMEs, so being able to access funds quickly and easily is key to local business flourishing – not to mention the economy of the entire country!
Thankfully, these days there are increasingly innovative lenders, including fintechs and neobanks, helping to ensure SMEs get access to the credit they need. We’ve chosen a handful of these innovators who are up for the challenge.
- Shift Financial – Billed as a better way to do business, this Australia-based fintech focuses on secure, flexible, and simple business banking, including overdraft for working capital, payment options to buy operating equipment, funds for business expansion and even trade accounts to pay suppliers. With additional solutions for merchants and brokers, the company aims to put more control directly in the hands of Australian businesses.
- Propsa – With a range of lending solutions and dedicated business accounts, Prospa aims to match the needs of Australian businesses by managing cash flow, offering small business loans and lines of credit. With the ability to apply on line and get same-day decisions, Prospa’s customers are able to access much-needed funds as quickly as the next business day.
- Moula – Offering credit decisions for businesses in under 24 hours (after an average application time of only 7 minutes), Moula will lend up to $250K with no assets required, and no penalties for early repayment. Aiming to support Australia’s small businesses, the company enables its customers to optimize cash flow, purchase needed inventory, pay for overhead costs, and repay debt effectively.
- Bigstone Finance – With the ability to pre-qualify in under a minute, Bigstone Finance offers online asset and equipment finance applications to ensure quick and easy access to business loans. Funding everything from coffee machines to cars and even medical equipment, the company offers three products – equipment loans, equipment rentals and finance leases, with flexible terms and some credit decisions made in under an hour.
- Octet – Recent winner of the “Excellence in Business Lending” award from Fintech Australia, Octet enables small business growth with intelligent supply chain finance and payment solutions. Offering business lines of credit, supply chain acceleration, debtor finance and even a proprietary payment solution, the company ensures businesses can easily access all of their funds in one place, including business finance, working capital and supplier payments.
- Judo Bank – Australia’s only challenger bank built specifically for lending to SMEs, this innovative organization seeks to bring back the lost art of relationships in business banking. Created by experienced business banking professionals, they brand themselves as a ‘genuine alternative’ for SMEs who want quick access to not only funds, but the superior customer experience they deserve.
Faster Loan Approvals
So how are all of these organizations able to do what the larger, more traditional lenders can’t? They have embraced the use of digital technology, data, and advanced analytics like machine learning and AI to a) simplify (and in many cases, completely digitally transform) the application process as much as possible and b) automate credit decisioning to provide accurate, real-time approvals, allowing SMEs to gain access to funds quicker than ever before. As a bonus, the products these innovative lenders offer SMEs tend to be more flexible and more personalized to their unique needs.
By automating data collection, risk decisioning and pricing, lenders can automate approvals and ensure funding is in hand within a matter of only days – or even hours!
Want to find out more about how to increase SME loan approvals without increasing your risks? Explore the key components needed to build world-class SME lending experiences.