SMB Lending: Marketplaces vs. Banks

MEDICIGlobal Head of Content

During the last 25 years, about 7% to 9% of small businesses close each year on average – slightly less than the number that open – according to LendEDU. Among the reasons small businesses close, access to credit is becoming less of an issue in why a business closes compared to during the Great Recession: only 5% of businesses closed in 2015 because of lack of credit compared to 14% in 2007.

The democratization of financing due to the expansion of the types of players and credit product options has its pros and cons but one thing is clear – anyone can lend today. Why? Data.

While lending to consumers is straightforward enough in terms of access to massive behavioral and transactional data on a number of platforms of different types – e-commerce, internet companies, social media platforms (Facebook alone tracks 98 personal data points for each of its 2.19 billion monthly active users to target ads), etc. – successfully lending to small businesses at scale is a much more complex task. While SMEs represent over 90% of the business population, 60–70% of employment, and 55% of GDP in developed economies, financial institutions have difficulty addressing...

Elena Mesropyan

MEDICIGlobal Head of Content

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world. Elena has been recognized as one of the Top 100 Women in FinTech 2018. Prior, she has been ranked in the Women in FinTech Powerlist 2017.