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How can alternative data support both SMBs and Lenders

Access to financing remains a major problem for small and medium-sized businesses. Globally, SMBs have credit needs that range from US$2.1 trillion to US$2.6 billion.<br><br>Both the supply and demand sides have problems, which leads to credit gaps. SMB owners are hesitant to apply for business loans due to the lengthy approval process, multiple documentation requirements, and collateral requirements. SMBs are seen by lenders as having high-risk potential because they lack the data necessary to evaluate their financial health. Experts believe alternative data can be used to address both the supply a

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How can alternative data support both SMBs and Lenders

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  1. How can alternative data support both SMBs and Lenders? Access to financing remains a major problem for small and medium-sized businesses. Globally, SMBs have credit needs that range from US$2.1 trillion to US$2.6 billion. Both the supply and demand sides have problems, which leads to credit gaps. SMB owners are hesitant to apply for business loans due to the lengthy approval process, multiple documentation requirements, and collateral requirements. SMBs are seen by lenders as having high-risk potential because they lack the data necessary to evaluate their financial health. Experts believe alternative data can be used to address both the supply and demand sides. Traditional financial data like sales, bank accounts, business transactions, and other transaction data have merits. However, online rankings, social media, and mobile data can give an SMB a more nuanced view of its performance. Alternative data can be used by SMBs to improve their creditworthiness. SMBs can build their credit profiles by using other metrics such as customer reviews and online sales. These data sets have proven to be valuable for fintech lenders. They have been able to solve the problem with advanced analytics. AI has made it possible to analyze these data sets more quickly and accurately, making stronger predictions about the performance of SMBs. These advantages make alternative data a viable option for SMBs and lenders to bridge the gap and meet the market's unmet needs.

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