SME sector is fast growing, and it has become an important part in the growth of economies. Despite all these if your small business is looking for funding, there are several roadblocks in front of you. Most SMEs struggle to acquire enough credit to keep their company afloat and operational. Most of the cases it is very difficult to get funding for SME. Because of their high-risk proposition and challenging customer segment (because most of them lack documents on income statements, balance sheet, operating performance, etc. and their performance-related data is hardly available on any public forum) that might have a higher rate to default. So, SMEs are turning to traditional methods of financing their ventures such as borrowing from friends and families, taking personal loans, and charging their business expenses to their personal credit cards. While these methods might be able to fuel the business in the short term, they are not feasible when an entrepreneur is thinking long term growth. In this scenario alternative lending solutions created a new hope for SMEs. Alternative lending providers have witnessed innovation across loan origination, underwriting, documentation, data management, profile management, and loan servicing.
Major alternative lending solutions
P2P Lending
Crowdfunding
B2B Lending
Equity based Crowdfunding
Invoice trading
Why alternative lending solutions are becoming more popular among SMEs?
All these new-age SME lending solutions ensure smooth lending cycle for all types of SME loans-from loan origination, loan approval, electronic monitoring the documents, underwriting, auto-KYC verification, document capture automation, document management system, automated management of collateral, error-free data entry, decreased onboarding time, and personalized services. Not just that, it offers business owners faster loan processing time, less paper works, zero capital and flexible payback options.
Alternative lending institutions (peer-to-peer lending platforms), with the help of fintech, have been able to address all the issues that had become an obstacle to SME growth when it came to credit and financing. With quick loan origination processes, single-point dashboards ensuring maximum transparency between lender and borrower, and easy disbursements and repayment options, credit financing has become way easier for SMEs.
