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Source: SME Finance
SME Finance, the fintech reinventing growth financing for small- and medium-sized enterprises, has launched Smart Loan — a revenue-based financing solution offering a fairer, faster AI-powered service for startups and SMEs, including e-commerce sites, seeking unsecured lending up to €50,000.
SMEs are the backbone of modern economies. They represent 99% of all businesses in the European Union, employing around 100 million people, just under 43% of the total in the European private sector. SMEs account for €10bn in turnover, more than half of Europe’s GDP.
However, they are typically overlooked by the traditional banks, who regard their needs as uneconomic to service. Many entrepreneurs report they feel left out by banks’ mechanical and proscriptive lending criteria, which usually require a minimum of two years’ trading and fail to take growth potential into account. As a result, many SMEs remain under-financed and at-risk of serious business challenges, with the difficulty of accessing business finance increasing significantly as business size decreases, according to the most recent European Central Bank (ECB) Survey on the Access to Finance of Enterprises (SAFE) in the euro area.1.
Smart Loan has been designed by SME Finance as an alternative to the traditionally slower, more conservative and potentially biased lending practices of traditional banks. Its use of AI and open banking shortens and simplifies the business financing process, and introduces unbiased lending criteria derived from contextual trading and cash flow data. The lending decision takes less than one hour and the loan is transferred within 24 hours. The data can all be provided remotely and digitally, reducing the bureaucratic burden on businesses when borrowing to expand.
Mindaugas Mikalajūnas, CEO of SME Finance, said: “We understand the challenges faced by entrepreneurs in startups and SMEs wanting to grow their businesses. Traditional banks are way too conservative in their approach and fail to take account of the individual potential of each business. SME Finance’s new generation business financing creates easier access to working capital and growth opportunities for businesses, whether they are startups or not. Our new Smart Loan is a fairer, faster alternative to the financing offered by traditional banks and VC equity funding, even for companies with short trading histories.”
Traditionally, when assessing credit risk, banks request a lot of information and documents. Large companies with an in-house finance department can handle this task relatively easily, but the process creates difficulties and costs for smaller businesses.
SME Finance’s Smart Loan also provides greater flexibility. It enables the size of loan available to grow together with the customer, from €5k up to €500k. If a company successfully repays a loan and its turnover has increased, it is eligible to receive a larger amount to generate further growth. The loan repayment term can be up to 36 months depending on the company’s financial details.
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