Description
These new approaches leverage recent developments that have reduced some of the hurdles to lending to small businesses, specifically the emerging digitization of small business practices – such as government-mandated e-invoicing – as well as the growth of online finance and mobile money platforms.
Access to alternative data flows from these electronic sources and new analytic tools are smoothing the due diligence process and speeding loan approvals.
By unbundling the suite of financial services usually found at banks and using niche and affinity marketing approaches, these pioneering lenders have unlocked new ways to identify, assess, serve, and support small business clients.
Taken together, these trends present a new opening to close the large finance gap facing small businesses, and many actors can play a role: investors, regulators, microfinance institutions, entrepreneurs, and other startups.
