Barclays has hit a new milestone in U.K. banking. The financial institution is the first to offer nearly instantaneous small business loans via a mobile app, reports said Thursday (Jan. 5).
Of course, the loans aren’t exactly instant, but they’re pretty close. Reports said Barclays can provide an SME with financing within 60 minutes, with loans ranging up to £25,000 (about $30,000). According to reports, the new service is available to the bank’s existing 260,000 SME customers using the mobile app.
The mobile app provides a small business with a questionnaire to assess a borrower’s risk. Approval can occur within an hour, as can a transfer of funds into a small business bank account.
At present, Barclays said that about 1 million SMEs use its services, though the lending solution via mobile app is currently only available to a select number of those companies that meet criteria for solid credit histories and strong growth potential. Customers need to have at least a six-month history working with Barclays and must have the mobile app to access the service, reports added.
Barclays first piloted the solution and found that 86 percent of the businesses that took advantage had never applied for a loan from Barclays before, suggesting the speed and convenience of the loan application could lead to significant growth in Barclay’s SME loan customer base. Further, the bank commissioned research that found two-thirds of SMEs would see turnover increases should they be able to access the right type of financing.
Still, the bank will face challenges. During its tests, Barclays found that nearly a third of SMEs ultimately didn’t decide to apply for a loan even though they agreed it may be a boost to their companies (that figure is even higher for the smallest companies, reports said).
But the speed and convenience of a mobile loan application could place Barclays at a new level of SME lending competition, now offering services that were once considered by alternative financiers as a unique alternative to traditional bank financing.