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Case Studies

How can open accounting APIs help build better lending products for SMBs?

December 17, 2020
accounting apis for smb

Lenders have traditionally found it challenging to create products that are well suited for SMBs. Lending products generally fall under two categories, personal lending and institutional debt. Neither of these categories cater specifically to the needs of SMB owners. Due to this gap in the market, SMB owners tend to rely on personal loans, but this option is not an optimal solution for small businesses.

Lack of available data has been a primary reason for why lenders have not been able to create tailored products for SMBs. Accessing data on SMBs can be time consuming, expensive and sometimes inaccurate. This can lead to roadblocks in acquiring such data sets to make a sound decision in creating SMB focused lending products.

Open accounting APIs can help alleviate some of the problems around SMB data. These APIs not only provide lenders with accuracy but also create a constant flow of accounting data on SMBs to gauge on their ever changing needs.

These data sets can help Fintechs create a portfolio of products that address specific pain points such as funding purchase orders, buying new equipment or overcoming issues with payroll. With the access of these alternative data sets, lenders can get a better sense of what SMBs need and design better products by keeping these needs in the center of decision making. While these tools can help in defining product scope from an SMBs point-of-view, it also aids in increasing speed in approvals and increased access to capital — aspects which are important to SMBs.

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