How SME Lending From Fintech Firms Is Driving The Growth

April 11, 2017

How SME Lending From Fintech Firms Is Driving The Growth

Even when consumer credit options have increased dramatically, and there are so many solutions available for them to purchase products and services, business credit and SME lending is still a major problem for many financially excluded start-ups and SME businesses.

According to a recent estimate, more than 200million small start-ups and companies worldwide do not have access to credit options or SME lending options available to them due to a variety of reasons. This has led to a credit gap of around USD 2 trillion of which the most affected happens to be the countries with a low-income level and a large number of start-ups.

The lack of start-up business lending has thus become a huge barrier for growth both for these start-ups as well as for the country as a whole because these SMEs account for almost 95% of all the global firms and have a considerable impact on the economic growth and employment levels at the global scale.

However, Fintech with the aid of technology and newer financial lending models has made a massive revolution in the start-up business lending. There is a survey which points that only in the year 2013-14, equity investments of Fintech firms grew from USD 4 billion to more than USD 12 billion Let us have a look at how Fintech has made this possible and see the changes it has brought about in the start-up business lending.

How SME Lending from Fintech Firms is driving the Growth

The financial institutions have to take into consideration the risk management guidelines, operating costs of credit and the high complexity of lending to such small scale businesses into account before financing for such companies. However, with a series of innovations and growth in the industry, a change was required in the traditional practices and principles involved in start-up business lending. Let us understand how Fintech has created a revolution in the way finance sector perceives start-up business loan and has managed to provide credit options to many start-ups and small-scale businesses.

#1 Advanced Analytics and Data sources

The biggest threat to traditional microfinance is data asymmetry. It is critical to disrupting the traditional ways of perceiving and analyzing data by finding alternative sources of evidence and means to look at it. With the advent of Fintech financing coupled with technical advancements and digitalization, there is an increased usage of transactional data, social media impressions and contractual details in analyzing the credibility of a company and assessing their repayment capacity. This makes it simpler to determine the best financing options and get insights of the business and its health.

Automation of underwriting and other financial paperwork

There is a drastic decrease in lengthy paperwork and underwriting procedures of the lending firms making SME lendingprocess simple and less time-consuming.This cuts a lot of overhead operational cost which in turn can reduce servicing cost and can allow a rate reduction for small businesses. The automation also enables the companies in understanding the repayment policies better. It is also observed that providing VAS and support along with financial aid can improve the bank revenue by 30%-50%.

Techniques like Crowd funding and Peer-to-Peer Lending

Fintech lead to growth in alternative business lending models like peer-to-peer funding and crowd funding which has taken the SME lendingto another level altogether. These have made access to credit less complicated to the SMEs and start-up firms thus bringing down the growth barrier. There is also an increase in prospective investors in P2P lending and crowd funding techniques.

Irrespective of the strategy involved, the primary focus was to bring down the growth barrier and help the SMEs and start-ups to get credit access. However certain risks like restricted protection of retail investors, funding to undeserving businesses, and those associated with an unregulated and opaque business sector persists and has to be dealt with carefully.


Get Free Quotes

Featured Image

April 11, 2017

Connect with Service Provider

Get connected within 24 hours to pre-screened, trustworthy and small business friendly service providers for Services in top Indian cities

Latest Posts

Top 7 Whiteboard Explainer Video Tips That Talks About Your Business

December 01, 2018

Whiteboard animation videos !! The video style has been trending for obvious reasons. The whiteboard animated videos are known for boosting

Read More  
Facebook Ads | Top 6 Reasons Why Your FB Ads Are Not Converting

November 29, 2018

There were only 3 million active users on Facebook 4 years before; and as of 2018 there are more than

Read More  
Top Facebook Boost Post Tips - Get Results and Generate More Leads

November 13, 2018

Majority of the online marketers who wish to advertise on Facebook and get more leads using Facebook boost posts will

Read More  
Why Should Your Business Hire Explainer Video Company Instead Of Freelancers?

November 10, 2018

We all know the benefits that having a website can help you trigger brand awarenes; overhauling your public image virtually

Read More  
Animation Video Maker | Promote Your Brand With Our Corporate Videos

November 03, 2018

Whether you’re a beginner or already an established brand, SME Networks is an expert Animation Video Maker company that

Read More  
Facebook Ads | Top 7 Effective Tips To Write Facebook Ads That Convert

November 01, 2018

I’m constantly on Facebook, scrolling through my company feed reading the news and looking at pics…I’m not

Read More  

Latest Events

CLO Engage Summit

Date: 10 January, 2019 - 10 January, 2019

India Investment Conclave

Date: 11 January, 2019 - 11 January, 2019

11th Global Intellectual Property Convention

Date: 17 January, 2019 - 19 January, 2019

PanIIT Conclave 2019 Artificial Intelligence

Date: 18 January, 2019 - 19 January, 2019

Mobile And Digital Marketing Summit

Date: 27 November, 2018 - 27 November, 2018

Emerging HR Summit

Date: 18 December, 2018 - 19 December, 2018

PITS - Pharma IT Summit

Date: 28 November, 2018 - 28 November, 2018

World AI Show - AI, MI & Robotics

Date: 22 November, 2018 - 22 November, 2018


Date: 21 October, 2018 - 21 October, 2018

Decathlon India Run

Date: 14 October, 2018 - 14 October, 2018

One thought on “How SME Lending From Fintech Firms Is Driving The Growth”

  1. Hello Lady & Gentlemen, Are you in need of financial assistance? I’m Susan Benson. I’m a lender and also a financial consultant.

    Do you need a business loan, Personal loan, Mortgage loan or a loan to complete your project? if your answer is yes, I will recommend you should contact my firm. We render all kinds of loan services including long term and short term loans. For more info, write to us via Email: ( or Message me directly on WhatsApp via: +447903159998 & receive a response in an instant.

    We are a comprehensive financial service company and we are committed to help you improve your long-term and short-term financial goals. We specialize in providing structured finance solutions to individuals and companies in the most effective and fastest way.

    Here are some reasons why you should contact us for a loan;
    * Convenience – You can Apply for a loan anytime, anywhere.
    * Flexible Amount – You decide how much you want to borrow.
    * Fast Direct Funding – Receive your loan within 24 hours after approval.  
    * Flexible interest rate of 3%.
    * High Approval Rates
    * Flexible Repayment – You Get The Chance To choose the Repayment Date, either weekly, monthly or yearly for a duration of 1-30 years.
    * Simple online application.
    * Personalized guidance and expertise.
    * No hidden Charges

    Don’t lose out on an opportunity due to lack of funds. Contact my company now, we can assist you with a loan because we have helped numerous individuals and organizations who have been facing financial difficulty all over the world

    For more information about our loan offer, kindly send us your loan request via:
    WhatsApp: +447903159998

    Intermediaries/Consultants/Brokers are welcome to bring their clients and are 100% protected. In complete confidence, we will work together for the benefits of all parties involved.

Comments are closed.