Accelerate Your SME Lending with Real-Time Approvals

by Fintechnews Africa
2 August 2023

Small and medium-sized enterprises (SMEs) are the foundation of the economy as they drive growth, build competition, and create jobs. Despite this, they are often at the back of the line when it comes to getting quick access to credit.

Research shows that 44% of SMEs seek funding to meet their operating expenses, and we can expect this number to grow considerably during emergencies and times of economic uncertainty. The same research found that 56% of SMEs need funds to expand the business or pursue new opportunities.

For SMEs, waiting weeks or months for approval means significant delays in exploring growth opportunities, or, worst case scenario, could result in business closure. For the most part, securing business loans from traditional financial institutions is a slow and arduous process.

It’s paperwork heavy, progresses at snail speed, and often results in low approval rates. This is because lenders find it difficult and expensive to assess a business’ default risk without human intervention.

Digital lenders have been luring SMEs away from traditional credit options with simple application processes, rapid decisions, and high approval rates.

Image by vectorjuice on Freepik

Over the last few years leading fintechs have driven major innovation in the SME lending industry, with digital lenders using technology to decrease approval times from months to minutes, without exposing themselves to undue risk.

This increased competition for SME businesses poses a significant threat to lenders who delay innovation strategies. Not only do they risk losing potential new clients, but existing customers are also drawn away by the convenience offered by digital alternatives.

Innovative fintechs and banks have found ways to use technology to break down the barriers that prevent loan applications from moving swiftly and efficiently through the decisioning and underwriting process.

Replacing or rebuilding the foundation of one’s lending solution should be a one-time event, as it can be both time-consuming and costly. Lender’s risk technology should be able to support their current needs and have the features and functionality to drive business growth.

However, it’s also essential to look at future needs when choosing or building technology. For these reasons, lenders should look to technology that can adapt and evolve with their business.

With the right technology, SME lenders can optimise their credit decisioning processes to support low-risk, profitable lending.

Learn how to grow a SME lending business in real-time with credit risk specialist Provenir’s e-book “SME Lending: The Road to Real-Time Approvals” here.