How can open accounting improve SME lending?

SMEs are a profitable segment for lenders as many require funding and loans to run their operations.

However, they vary significantly and so do their financial needs. This has posed challenges for those looking to serve this nuanced market.

Some fintech lenders have taken advantage of this by providing small and medium-sized businesses with products and services that align well with their needs. For example, by streamlining application processes and pulling in data from APIs, SMEs have been able to procure faster loans.

Still, there are still so many opportunities to improve the SME lending experience. Using open accounting APIs, lenders can look to access SME data to increase the amount of available information to assess potential. Open accounting data records real-time data, which provides lenders with a clear snapshot of a business at that time.

SMEs can also have multiple bank accounts and credit cards as part of their business operations. Assessing multiple sources of data can be cumbersome and time-consuming. Cloud accounting platforms centralize multiple sources of accounting data onto one platform, which not only helps SMEs in running their businesses but also assists lenders in getting a clearer picture of a prospect’s financial health. As a result, lenders can quickly do checks to gauge a business’ risk profile and expedite loan approval processing.