Reports Friday (Jan. 12) said Trade Ledger will link its deep technology capabilities into Tradeplus24 to enhance small business (SMB) receivables finance underwriting by analyzing supply chain data, including individual invoices. According to Trade Ledger CEO and Co-Founder Martin McCann, that capability means lower small business loan origination costs.
“A major problem for banks and other lenders across the globe is the cost, effort and perceived higher risk of loan origination in the SME sector in particular,” he stated. “This sector has long been plagued by outdated credit assessment technologies that prevent lenders from easily or cost-effectively acquiring real-time information about persistent risk, individual transactions or trade document updates.”
“The result is enormous uncertainty, leading lenders to either applying a premium or avoiding lending to individual SMEs altogether,” the executive continued, citing PwC research that found a more than $90 billion gap in small business lending in Australia, “though this is on the low side of our estimates,” he said.
Technology can remove barriers to more sophisticated underwriting that currently exists due to the document-intense nature of trade, he said.
Automation can also help to “significantly reduce the cost of loan origination, completely eliminate certain types of risk and fraud and rapidly increase the volume of their loan book — all without adding extra stuff,” he stated.
According to the companies, Tradeplus24 is targeting Australia because its market offers high margins and limited competition. The company said it also plans to work with a local bank in the country, though it will continue to expand across Europe, Asia and Australasia.
“To realize our growth ambitions, it was imperative to find a comprehensive technology solution that could be seamlessly applied across our entire global value chain,” said Tradeplus24 CEO Ben James in another statement. “We believe the future of lending is not with slow-moving lenders employing legacy technologies, [but] rather with strategic technology partnerships that give lenders a competitive edge by cracking the SME working capital market.”