Fintech — the future for SME funding

…and the rise of alternative lending

As we enter into a start-up driven world of technology and finance, it is evident that the world of Fintech has undergone some big changes since the financial crisis in 2008, when banks became reluctant to extend credit to SMEs. Alternative lenders have started emerging over the years to help fund businesses that don’t qualify for lending at the bank, and given the decline in bank lending to small businesses, the alternative lending industry is booming.

It is typically acknowledged that banks tend to provide personalised services for a few high-value customers, or automate services for a mass consumer market. There once was a time when you would drive to your local bank when looking to raise finance for a start-up business or apply for short-term financing for your existing cash flow shortfalls. But in today’s ever changing world of finance and the sources of funding available through technology channels, small business owners are looking elsewhere to borrow.

Out with the old…

Incumbent companies today are competing to stay relevant against the fast moving pace of start-ups and financial technology companies.

According to the SME Finance Forum, a global small business association, SMEs are a potential enormous market and small companies account for 90 per cent of the world’s businesses.

The popularity of fintech is steadily rising and a gap has been filled in the lending market to bridge cash flow shortages for small to medium sized enterprises that face restrictions with banks.

Alex Oritogun, Business Development and Funding Specialist at Populous World says, “banks simply aren’t always willing to understand SMEs and fintech is booming right now, I believe the demand for simple and fast cash flow access for entrepreneurs’ will rapidly increase in the foreseeable future. We are faster, more cost effective, and we use a unique credit scoring and are less restrictive that the traditional banks”.

Populous World is the way forward for SMEs when it comes to alternative lending in today’s fast-paced world of finance.

The surge of fintech companies, which are often described now as ‘incumbent disruptors’, arose due to its long-awaited purpose that fundamentally addresses the severely inadequate financial services available to small and medium-sized enterprises. The Financial Times reported that there is an estimated $2tn gap between SME funding needs and what banks will provide. For business owners, it seemed inevitable that technology would be the leading cause for the changes in finance solutions for the foreseeable future.

Populous World, an alternative way forward for SMEs

As we see more companies attempting to bridge the financing gap for SMEs, business owners are seeking alternative lending companies that are able to massively improve the quality of funding services. Alternative lenders are simply any non-bank lender. These lenders can most often be found online, as they don’t have physical storefronts like the banks.

Populous World, a digital challenger, is a blockchain-based invoice discounting platform offering the solution to solve cash flow problems for SMEs.

Invoice discounting, the process of ‘selling invoices’, is progressively becoming more attractive to business owners and has opened up a new wave of lending. Producing invoices immediately after a service or sale of goods has completed is the key to success with invoice discounting, as it allows for a regular influx of cash throughout the month, which allows for better financial planning.

Populous World offers the most amount of flexibility where you can choose to discount the invoices based on your needs. A minimum number of invoices per month is not required and you can access funding services whenever required. Once the agreed percentage of each invoice has been paid — generally around 95% of the total — and have your customer repay the invoice to ‘Populous World’, the process is then entirely completed.

The purpose of Populous World’s invoice discounting platform is not just to help bridge cash flow gaps, but also to support and offer a better understanding of the needs of SMEs and alleviate operational problems and more onerous, time-consuming tasks in a cost-efficient, convenient manner.

Dr. Nemitari Ajienka, Smart Contract Developer at Populous World says, “selling invoices with Populous World is truly an innovative process. The use of blockchain allows the platform to store invoice records more securely, in a hack-proof format. In addition, all the data is backed up by the blockchain network meaning it is more secure than traditional invoice financing companies.

The advantage of the blockchain is that all records are immutable meaning it can’t be changed, as opposed to a bank where someone can change your invoice records”.

Immutable records, secure records, greater transparency, enhanced security, and immutability — all reasons contributing as to why Populous World is the way forward for SMEs when it comes to alternative lending in today’s fast-paced world of finance.

Lou Chan, Populous World.

https://populous.world/invoice-finance/for-businesses.html

Populous World is a team of professional financing specialists who have expertise in invoice financing in order to plan your stress-free and debt-free journey towards business prosperity.