How Open Accounting Can Help Lenders Offer Great Small Business Loans

Small and medium-sized businesses play a vital role in the economic development of a country. They often require funds to successfully run their operations and take their venture to the next level. SMEs need funds for a variety of purposes in their businesses, from buying real estate to paying off debt, boosting cash flow, purchasing equipment, hiring employees, and covering day-to-day business expenses.

What are the Challenges SMEs Face When Accessing Funds?

SMEs face numerous challenges when accessing loans. First, the application process for SMEs is still a complex manual. Moreover, the paper-based processes and endless documentation requirements of traditional lenders make it difficult for SMEs to get the desired loans Because most small and medium-sized businesses have no or limited credit history, banks are usually reluctant to provide loans to them.

How Open Accounting Can Help Financial Institutions Provider Greater Access to SME Lending?

Since SMEs represent a major function of the general business finance market, every lender wants to leverage the benefits of this by providing easier and faster funding. Today, many fintech lenders are using innovative technology to streamline the loan application processes and offer the best loan products to SME clients that align well with their needs and budget.

Besides, lenders are accessing financial, accounting and cash flow predictive data from lending APIs to determine their borrowers’ creditworthiness, procure faster loans, and make better lending decisions.

Today, providing a great SME lending experience is essential to stay ahead of the competitors, build a great reputation, generate profit and take your financial institutions ahead. Using open accounting APIs, lenders can see and predict the future financial health of an SME and therefore collect more accurate and real-time data to assess potential. Open accounting provides lenders the most robust accounting and financial data that later help them to drive operational efficiency, enhance the customer journey and make faster smarter decisions.

In the present lending scenario, lenders also look at a wide variety of data  and information to evaluate an SME’s creditworthiness such as bank account information, credit cards, utility payments, deposits, and more.

Assessing multiple sources of data can be challenging and time-consuming. A lending API can help lenders seamlessly access real-time, standardized data (accounting, financial, banking, and others) and turn it into clear and actionable information to power lending processes. This data not only helps SMEs to create a strong financial profile and get the right type of loan instantly but also assists financial institutions to get a clearer picture of an SME’s financial health.