Small to medium enterprises (SMEs) are the backbone of many economies across the world. They create jobs, contribute greatly to innovation and offer a range of products and services that keep our society functioning. However, SMEs often lack access to financial resources such as working capital loans, mortgages, or other financing options traditionally available exclusively for large companies with deep pockets. In this article, we will present fintech solutions that can offer you finding solutions for small businesses. We will present existing funding schemes and the future of this sector.
What is SME lending market versus the traditional bank loan?
SME lending is part of a traditional bank loan service, which is typically reserved for large companies with deep pockets. When it comes to lending, size matters because banks see a company’s ability to repay as largely based on the business’s assets or collateral. Traditional banks are less worried when they have industry expertise. As you might know, each time you are asking for a loan, the bank has to analyze your company against existing data sets. If this status is narrowed the funding will just be impossible. The bank wants to limit credit risk.
What are the four types of business loans?
The four types of business loans are :
– Equity: Lenders supply money to a company in return for shares of the company’s equity.
– Debt: The lender supplies cash, and the borrower pays back with interest over time.
– Mezzanine finance: A mezzanine loan is one that falls between debt financing (with regular monthly payments).
– Angel investors: A group or an individual who provides funds to a new, small company in exchange for partial ownership (usually they are also looking for the opportunity to provide guidance). Angel investors can also be your friends and family.
Those four types of business loans can be organized around at the market portal. With our solution Investglass come up with builds a dozen loan portals. The portal connects clients, firms offering a perfect match between loans: lend and borrow.
Which SME business should you start?
Lending platforms are an emerging development in the financial services industry. They provide transparent mortgage comparisons and, depending on the platform, advisory services to their customers. Building the platform with InvestGlass is a good start before building a neo bank.
Platforms have become popular due to easier access and the potential for standardization of product offerings among lenders. Lenders are increasingly looking to partner with platforms in order to provide their products for use on a platform.
One of the primary benefits that platforms offer lenders is access to the customer base, which typically exceeds what they would be able to attract on their own due to better conversion rates and lower marketing costs. Small businesses won’t mind searching for support for a new fintech solution.
Platforms can also be a key driver of innovation. For example, by using the customer data they have collected over time, platforms are able to provide lenders with information about their customers which may help them create more effective products and services. InvestGlass white label platform will help you build your own platform. In less than a day, you will build your own SME lending solution with InvestGlass as a backbone.
Government support changes the loans industry with COVID lending. Make a wise analysis as government COVID loan changed the landscape for 12 months offering money to any companies in the Western countries.
Digital processes and repayments algorithm
Digital processes have taken over the customer experience for banking institutions. They may offer digital-only lending to members eager for a quick response, and credit card companies often use advanced digital solutions, such as virtual card numbers or security chips on one’s physical reader to protect their investment from attacks common in the cryptocurrency marketplace.
Industries ecosystems and funding circle
Mortgages are an entry-level product and provide many connecting points for additional products to retail customers, such as insurance. For a long time, this opportunity was hardly used in Switzerland vs London; but when the search for alternatives sources of revenue is combined with opportunities in residential financing (first and foremost), there have been more market participants setting.
How small and medium-sized enterprises can leverage fintech solutions?
Small businesses can leverage invoice finance and benefit from fintech competitive advantage as traditional banks will usually answer with more conservative positioning.
Fintech usually offers modern schemes and understands medium-sized businesses faster than traditional banks tanks to digital onboarding and automated notation replacing manual expertise.
As we offer with InvestGlass and open banking solutions, lending can be connected directly with lenders in a cloud-based solution. Our solution offers secure access for funding and customers will find a range of credit services. Investglass does not provide financial service so we will connect the CRM to an accounting tool relevant to your country.
If you are specialized in UK finance, we have connections for UK SMEs lending fintech. Authentic specialists will look into your specific lending focus to help you purchase the best fintech solution driving your future growth.
The data is hosted on swiss servers in Geneva and Lausanne. If required by your industry regulator or local government, we can host the InvestGlass CRM system on your server. Hosting the system could be pricey for a small business and we suggest usually starting with the cloud-based solution and then moved to an on-premise server.
InvestGlass fintech specialists will first analyze your specific targeted business lending sector and then manage the orchestration of your cloud solution to invoicing finance fintech, risk management solutions, antimoney lending applications, and trading applications.