Large funding gap forms in SME lending sector as UK banks fund just 8% of small business loans
LONDON, Dec. 11, 2019 /PRNewswire-PRWeb/ -- Small businesses worldwide are experiencing a huge funding gap and alternative lenders are helping to fill that gap thanks to new technology which allows these lenders to fund both large and small SME loan requests. The funding gap has grown to $5 trillion in the US, $77 billion in the UK and $825 billion in Europe in 2019 (1).
"Banks have large cost structures which often prevent them from funding smaller loans such as the ones typically requested by SMEs. It takes a bank as much effort to fund a small loan as it does to fund a large loan and often smaller loan requests don't make it through the application stages," stated Tomer Guriel, CEO of ezbob.
A study conducted by ezbob found that the cost for a UK bank to process and fund an SME loan was between $2,500 to $5,200 while Deloitte, a global consulting firm, found that US banks experienced higher processing costs at $2,500 to $10,000 per SME loan. The disparity in costs is due to the time it takes each bank to process a loan application through the different stages such as: document collection, credit approval/set-up and creating the loan documentation. Deloitte found that it took a bank 3 to 10 weeks to complete an SME loan.
Guriel added, "ezbob's SME lending platform is the solution that banks are now using in order to reduce their internal costs as well as to offer SMEs seeking finance a superior customer experience."
ezbob's technology offers incumbent banks a state-of-the art, end-to-end, 100% digital platform for SME lending allowing banks to provide a seamless and superior customer experience.
ezbob's platform is currently deployed at some of the world's largest banks. SME customers that apply for funding at these banks can apply online in minutes, without having to provide any paperwork and receive a funding decision instantly.
ezbob's system includes KYC/AML, sanctions and fraud capabilities for onboarding the SME applicant as well as a decision engine using the bank's proprietary risk-based pricing. Once the loan is approved the SME applicant is presented with a funding offer along with a clear repayment schedule. Thereafter, the applicant digitally signs the loan agreement and funds are instantly transferred to their business bank account.
ezbob's platform saves banks up to 80% of their current costs associated with SME lending allowing banks to lend more efficiently therefore making small business lending profitable. Utilizing ezbob's technology banks can help lower the funding gap in small business lending.
(1) Business Insider & http://www.smeweb.com/2018/09/20/high-street-bank-converts-just-8-sme-loan-applications/
About ezbob
ezbob is a UK based 'Lending as a Service' software provider for banks and other financial institutions. The company's leading product is a 100% digital, end to end business loan platform.
The automated online platform analyses the applicant's personal and business information, including links to business bank accounts, online marketplaces, online accounting providers, payment service providers, and e-commerce platforms with which ezbob is integrated. ezbob compiles this data into a workable client profile in an instant so that its risk engine can make a qualified decision, allowing the approved applicants immediate funding.
Oak Tree Capital, Bank Leumi, the Hagshama Fund and the UK Government's Business Bank's Angel Co-Fund are equity investors in the company.
SOURCE Ezbob
