Why alternative lending solutions best for your SME lending?


SME sector is fast growing, and it has become an important part in the growth of economies. Despite all these if your small business is looking for funding, there are several roadblocks in front of you. Most SMEs struggle to acquire enough credit to keep their company afloat and operational. Most of the cases it is very difficult to get funding for SME. Because of their high-risk proposition and challenging customer segment (because most of them lack documents on income statements, balance sheet, operating performance, etc. and their performance-related data is hardly available on any public forum) that might have a higher rate to default. So, SMEs are turning to traditional methods of financing their ventures such as borrowing from friends and families, taking personal loans, and charging their business expenses to their personal credit cards. While these methods might be able to fuel the business in the short term, they are not feasible when an entrepreneur is thinking long term growth

In this scenario alternative lending solutions created a new hope for SMEs. Alternative lending providers have witnessed innovation across loan origination, underwriting, documentation, data management, profile management, and loan servicing.

Major alternative lending solutions

P2P Lending


B2B Lending

Equity based Crowdfunding

Invoice trading

Why alternative lending solutions are becoming more popular among SMEs?

All these new-age SME lending solutions ensure smooth lending cycle for all types of SME loans-from loan origination, loan approval, electronic monitoring the documents, underwriting, auto-KYC verification, document capture automation, document management system, automated management of collateral, error-free data entry, decreased onboarding time, and personalized services. Not just that, it offers business owners faster loan processing time, less paper works, zero capital and flexible payback options.

Alternative lending institutions (peer-to-peer lending platforms), with the help of fintech, have been able to address all the issues that had become an obstacle to SME growth when it came to credit and financing. With quick loan origination processes, single-point dashboards ensuring maximum transparency between lender and borrower, and easy disbursements and repayment options, credit financing has become way easier for SMEs.

How P2P Lending could benefit from block chain?

p2p lending block chain

Block chain is a trending technology that is revolutionizing global financial sector. Its impact on various industries has been so positive that even the lending market has taken note. P2P Lending firms globally have started harnessing blockchain concepts as it is a potentially disruptive technology. Start-ups in this space are all set to invest in block chain technology and develop a distributed ledger system

between themselves. So, how exactly could blockchain can propel its influence in transforming P2P lending? Let’s examine.

Benefits of combining P2P lending with block chain

Lending revolves around two factors: risk & trust. When it comes to Peer-to-peer lending, it is basically a form of unsecured lending. The lenders, who in this case are referred to as investors, loan money to borrowers directly without any middleman. This makes it a little bit complicated to use assets as collateral for loans. But block chain have a truly trans-formative effect on P2P lending in addressing the risk and trust factor.

With block  chain technology, anyone can independently record any data that needs to be verified as having happened and thanks to its distributed nature, anyone on the network can have access to the same, up-to-date data, which makes the whole process inherently transparent and incorruptible.

Another significant benefit is tokenization.  Adopting block chain would allow tokenisation of loan assets, enabling investors to easily trade their loans with other P2P network participants. Some of the assets may not qualify as collateral in the mainstream lending market, but with blockchain technology and through tokenization, assets such as patents, intellectual property or even branding can be tokenized and used as collateral for hard money loans.

In addition, borrowers are also likely to get better value for the assets provided as collateral if done via a block  chain-based network than in the mainstream market. In the tokenized form, valuation of such assets is likely to be more global and reflective of the actual market value than a placeholder valuation a mainstream lender might attach to the property.

This will lure more borrowers to the peer-to-peer lending market, thereby growing the addressable market. Generally, peer-to-peer platforms try to spread the risk across several loans, which means investor money is rationed to different borrowers. This is another concept that has helped the peer-to-peer lending market continue to gain more investors.

P2P Lending platforms that understand how to make the intelligent use of block chain technology will always have the edge over their peers.

About Insight Consultants

Insight Consultants specializes in digitizing the lending ecosystem. From general to specialized, prime to sub-prime, we have helped firms operating across the lending landscape reap the benefits of digitization. We provide 360-degree solutions starting with business consulting, solution creation, deployment and roll out of Block chain based solutions for IoT, supply chain and the fintech and lending verticals. So, if you are looking for ways to harness the power of block chain or would just like to know more,