Fintechs provide competition in small business lending

The emergence of disruptors using finance technology (hence fintechs) onto the SME lending scene is welcome news for the thousands of credit worthy small businesses which still struggle to get finance from banks.  These disruptors could well become dominant in unsecured lending to small business but they are not a panacea for all SMEs which find it difficult to access to credit. It is still early days and education and regulation are required to ensure this developing industry is able to fulfil its potential.

We inform SMEs about the benefits and risks associated with borrowing from a fintech. In addition we are lobbying for appropriate regulation particularly in relation to fees which is the biggest area of concern for potential fintech borrowers. Self-regulation would be great but it is unlikely this will happen in the short term so the regulators need to become involved in order to establish acceptable standards of disclosure. Fintechs are a too important a development to allow the model to be derailed by a rogue operator or sub-standard regulation.

In this article in BRW we explain the pros and cons of  fintech financing for small businesses.

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