What Are We Seeing in the SME Financing/Loans Opportunity?

Post the financial crisis in 2008, SMEs’ credit conditions had worsened, and credit has remained tight for the past several years. We saw a reduced number of banks focused on the small-business segment, increased regulatory scrutiny that caused banks to tighten lending standards and the need for more internal approvals. In short, SME loans became less attractive. In the recent past, we have seen that the trend is reversing. Banks and FinTech companies are getting interested in SME financing. For some banks, it has again become good business and they want to grow it. FinTech companies are targeting the gaps. According to a study, small businesses in the United States carry nearly $700 billion of small-dollar loans, borrowing over $200 billion each year. There are various ways of funding small-and-medium-sized businesses.

There are various method/models used today in this field to get the data to assess risk. Here are some of the ways in which SMEs get funded:

1. Providing financing on the basis of sales data:

Companies like Squa ...

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