Technological models facilitating the processing of SME loans with banks

Small and medium-sized enterprises (SMEs) are often cited as the main driver of economic development, employment and innovation. They employ almost two-thirds of the global workforce, represent 90% of all businesses and represent more than half of global GDP. However, ensuring adequate financing has always been left in the gap between SMEs and growth. According to the International Finance Corporation (IFC) report, there is a funding gap of around $ 5,000 billion for formal SMEs and $ 2.7 trillion for informal and vulnerable SMEs. While traditional bank loans have been the most crucial source of finance for SMEs and entrepreneurs, there is an urgent need to develop a system overcoming credit constraints such as long on-boarding time due to manual processes, ineffective data monitoring and portfolio management, lack of customization to meet a wide range of businesses, manual regulatory and compliance policies and much more. Recent advances in digital technology and new business models for banks are game-changing by making it easier for banks to process loans to SMEs.

The digital transformation of banks has enabled them to streamline the disjoint financing processes of SMEs and to provide a quick and efficient solution to their clients. The technology automates the end-to-end lending process. It helps the customer to recognize their credit risks and needs. Additionally, the traditional method has many other overload issues that can be alleviated by an end-to-end online system in the ways mentioned.


1. The remote, faster and contactless boarding process for SMEs.
2. Faster deployment of new solutions by leveraging native low-code capabilities.
3. Accelerate the flow of information by connecting data and process silos with a digitized automation platform.
4. Accurate underwriting through big data analysis.
5. Reduction of loan optimization and disbursement time thanks to predefined algorithms.
6. Reduced time and operating costs with rule-based process engine.
7. Use artificial intelligence and machine learning to automate mundane tasks.
8. Use a real-time dashboard to accurately track the loan life cycle.
9. Remote access to capital loans for businesses through a line of credit through digital channels.
10.Reduction of human deviations and biases by accurately assessing risk with minimal documentation on a contactless virtual interface.

Due to technology and innovation, a major challenge can be met:

Long documentation and verification processes

The digitization and automation of lending solutions by banks has streamlined the cradle-to-grave lending cycle for SMEs, from prospecting to underwriting, disbursement and management. This saved them the heavy burden of paperwork and visiting the premises, leading to unstructured and dispersed processes that take a long time for them to operate.

Streamline the unstructured process

Digital lending solutions by banks with low code and cloud capabilities help them stay ahead of the curve and provide automated end-to-end financing solutions to SMBs. Its process becomes fast, transparent, agile for small businesses. It streamlined the unstructured process of funding building cross-functional, empowered decision-making and a seamless customer experience with personalized offerings for SMBs.

Risk mitigation

The fully automated approval process for SMEs has proven to be reliable for risk managers. Years of root cause default analysis, soft factor assessment, long standing policies and manual decision-making processes have made banks reluctant to extend loans to SMEs. Human gaps and prejudices have been eliminated by the use of new era technologies and thus reduced the risk analysis for SMEs. Through the use of rich risk data through advanced analytics, banks can generate streamlined financial statements, affordability ratio, and vendor concentration analysis in real time, thereby reducing disbursement time and cost savings. operational costs.

Fintech partnerships

The partnership with fintech helps banks equip themselves with modern technologies and products that allow them to tap into the SME lending market. Fintech helps create a software platform to integrate data from various sources and execute automated credit decisions for SMEs.


There is a need to stay afloat through the adoption of modern technology to strengthen the small business lending process. Digitization has brought banks and SMEs closer together by taking a systematic approach and automating the manual process. It also enables the growth of SMEs with the development of modern Omni channels and risk management tools to stay ahead in today’s competitive era. In addition, it reduced the vulnerability of credit market conditions, strengthened the capital structure of banks and enabled the seizing of instant growth opportunities by small and medium-sized enterprises.

The views expressed in this article are the personal opinion of Gaurav Anand, CEO and Co-Founder, Namaste Credit.


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