Credit-10 Experts Talk About The Need For Responsible Lending Policies For SMEs

As the European economy begins a new credit cycle, financial analysts at assert that there is a chance for more profitable growth if banks and lenders restructure their SME lending policies.

McKinsey & Company noted that many banks miss out on opportunities with small businesses as they consider their corporate entities. These lenders only miss out on profitable opportunities using old business models and relying on elaborate legal processes.

However, by rethinking these old policies and adopting more responsible borrowing principles for small businesses, they can meet the need of these businesses and capture the forecasted growth in the lending industry.

Credit-10 experts note that adopting simple, responsible lending practices from new working techniques, and the right technologies, including advanced analytics, can help banks make instant decisions and use risk-adjusted prices.

Opportunities In SME Responsible Lending

The last credit cycle ended with the economic impacts of the global pandemic. Due to the intensity of this pandemic around the globe, many businesses felt its impacts, and it took a while for the world to move on from it.

The unresolved financial needs of the world’s micro, small, and medium-sized businesses are estimated to be $5.2 trillion annually or roughly 1.5 times the size of the current lending market for these companies, according to a World Bank report.

However, the report noted that many banks still struggle to create perfect solutions for their SME customers who wish to lend money at a reasonable cost as these lenders categorize them as corporate bodies. Still, seeing these small and medium size businesses as highly sophisticated retail customers solves the problem for businesses and lenders as it is a win-win situation.

Building New SME-Lending Models

Analysts at Credit-10 note that there is a pattern towards successful models in the finance industry, which increases the success odds for responsible lending for small and medium-sized enterprises. According to the success pattern, strategy, process, analytics, and operating models are what every successful lending model should be based on. With all of these in consideration, reimagining small business customers to retail customers is the key to building a new SME-lending model that works for all parties.

The delayed funding time has been a pain for SME customers, and that can be easily sorted by automated lending. Many legal policies involved in the SME lending process also no longer meet the customers’ needs as they have evolved and multiplied over time.

Finally, the target model must incorporate new approaches to collaboration with a centralized credit authority and service operations to modify business models, boost regulatory readiness, boost efficacy, and boost efficiency.

Credit-10 is an international analytical site that provides information on lending offers and allows to choose a profitable online loan. Service operates in 15 countries, including Denmark, Norway, Finland, Sweden, South Africa, Mexico, Poland, Romania, and Spain.