Democratizing lending through innovation

The landscape of asset based financing (ABL) and short-term financing has undergone a significant evolution in recent years. In the past, short-term financing was seen as a solution used by distressed companies that need cash fast. It was (usually) a reaction to difficult conditions or cash shortfalls.

But financing is a strategic tool that fuels investment and economic growth. Smart SMEs can use additional funding systematically and intentionally, and not just as a defence mechanism. But for this to take hold, financing (including asset based financing) must be easy to understand and access.

In this article, we explore how ABN AMRO and are pioneering this transformation, making financing more accessible to SMEs while leveraging AI to enhance eligibility scoring and service automation.

Financing the “real” economy

The global tech scene gets so much attention and kudos - including here in Europe. But we don’t talk enough about the importance and impact of core industries like manufacturing and services to the economies in France, Germany, and the Netherlands. 

ABN AMRO and Defacto are dedicated to serving the whole business landscape, and especially small, “normal” companies. To do this, we need inclusive financial solutions that don’t rely on investor networks or pitch decks built by consultants. Those are valuable to, but SME financing needs to be: 

• Quick and convenient to access 
• Primarily non-dilutive 
• Based on real performance, not founders’ profiles
• Aligns with the company’s business operations 

We can deliver exactly this through better technology and a willingness to evolve. 

AI enhances eligibility scoring

AI plays a pivotal role in modernising finance processes. ABN AMRO and Defacto leverage AI technologies to enhance eligibility scoring, to enable faster decision making. 

At the same time, risk assessment is now more comprehensive. We can automatically verify every single document submitted and assess every business on its merits. The process isn’t limited by human bandwidth or people power. 

That’s important where the cost of risk has gone up for lenders. Many are less willing to accept risky clients, so extensive, AI-augmented assessments are crucial. 

Speed and efficiency are core differentiators

SMEs need to respond quickly to new conditions. They don’t have the luxury of large fundraising rounds and stockpiled cash. And that means we need to work just as quickly to help them. 

Lending providers must be motivated by speed of service. Borrowers will soon expect the application process, onboarding, and delivery of funds to be faster than we previously considered possible. Otherwise, they’ll simply go elsewhere. 

Financing as a growth lever

We should encourage smart working capital management among all businesses - not just the financially super-literate. Financing shouldn’t just be seen as an emergency option when funds are low. 

Lenders can help SMEs get strategic about financing and access funds to take advantage of pressing opportunities. Seasonal growth and timely advertising campaigns are both ideal use cases for short-term financing. SMEs can tap into external funds without risking their savings. 

This is only possible where the lending sector makes funds easily available, and educates borrowers and smart, low-risk ways to use them. 

Enabling SME Access to Financing

ABN AMRO and Defacto are working to make financing more accessible for small and medium-sized enterprises (SMEs). It shouldn’t be the realm of the well-connected or elite educated. 

New technology lets us serve a wide spectrum of clients safely and cost-effectively. We’re excited to make financing available to the small businesses our economy is built on.