How to Supercharge Small-Business Lending Decisions

Author: Irene Malatesta | February 23, 2018

This week, our Chief Business Officer Sebastian Rymarz published an article in Forbes, “Using Data To Supercharge Small-Business Lending Decisions.”

In the article, he discusses the many problems and challenged faced by small businesses owners in our current banking and financial ecosystem, and the exciting ways in which new alternative lenders like Fundbox are leveraging new data sources to offer faster lending decisions and better experiences to more customers.

Rymarz explains how small businesses are in a constant struggle to get the cash they need:

With 60- and 90-day payment terms now commonplace, it can take months before a company is paid for its work and repaid for its upfront investments in people, inventory and infrastructure. Hundreds of billions of dollars in unpaid invoices are “in the mail,” but this money doesn’t always arrive when it’s needed. Based on an analysis of Fundbox internal data, including over 20 million small-business invoices, a whopping 64% of small businesses are forced to wait for late payments.

For decades, lenders have relied heavily on personal credit scores, basing small-business lending decisions on a single data point. Unfortunately for my small business owners, that data point is misaligned and often inconsistent with the health and viability of the business. Until recently, there seemed to be no hope for fixing this situation.

However, thanks to technology innovations, a better way is within our grasp:

With big data analytics, machine learning and a swelling amount of information at our disposal, there is no reason why modern lenders should base important decisions on a single metric. Non-traditional lenders are leveraging these valuable resources to reinvent the way small companies manage their cash, attain credit and grow their business.

To help small businesses, we believe it’s necessary to evaluate them differently. At Fundbox, we don’t rely on a single data point. Instead, we take advantage of many other data sources, to build our Small Business Graph and look at businesses more holistically.

Learn more about how alternative lenders are using big data and artificial intelligence to change the status quo here in his Forbes article.

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