By Chirag Shah, CEO and Founder of Nucleus Commercial Finance

With recession on the horizon, many SMEs are struggling to keep their growth plans on track as they weather rising costs, supply shortages and staffing issues. While the Chancellor’s mini budget showed some support for the sector in a time of need, new research from Nucleus showed that around 40,000 SMEs are currently seeking finance to elevate their business. Fortunately, in recent years the traditional business finance landscape has changed dramatically with tech breakthroughs such as the AI-powered underwriting implemented by Nucleus, making the path to finance faster, simpler and more efficient for all. 

Prior to this, finance options for businesses represented more of a challenge than a solution. The application process was onerous on the borrower, with substantial amounts of paperwork required, and could be seemingly endless – with weeks between an initial appointment at the bank and the funds landing in the business’ account. These difficulties were exacerbated by the onset of the Coronavirus pandemic in early 2020, when many SMEs saw their business grind to a halt, and then found themselves struggling to get in contact with banks offering loans as branches shut, phone lines were inundated, and backlogs built up. But although the pandemic did claim some businesses as casualties, since the necessity of digital transformation for SME finance became more apparent, we’ve seen solution-led, digitised finance offerings arriving on the scene become more commonplace and this is certainly one great positive to come from the pandemic.

Smart technology positions finance within the grasp of UK businesses making it possible for lenders to make an informed decision on loan applications based on a real time snapshot of a business’ financial situation. This was given a massive helping hand by the introduction of Open Banking in 2018 which enabled companies like Nucleus to finetune machine learning models further to streamline the customer process and pave the way for advantageous rates of funding. Record numbers of SMEs are now able to access finance – Nucleus’ figures show just how game-changing the technology is, with over 95% of deals decisioned in just one hour.

The evolution of the business finance scene is ongoing, and the benefits to the SME sector go beyond the obvious. For example, Nucleus uses the insights gleaned from our machine learning models to empower businesses with invaluable data relating to the functioning of both their own business but also the sector in which they work. What we envision for the future, is fintechs becoming a true partner to small businesses rather than just a service provider, we can champion the needs of the SME sector by constantly innovating and moving with technology to provide better, more flexible products to the UK’s economic backbone. By demonstrating a real understanding of their customers’ needs and wants, beyond just the means of their product offering, fintech finance providers can become stalwarts in the small business sector by going the extra mile in providing first-class service, rapid decisions and the best customer journey. For Nucleus, our overarching mission is to use our tech capabilities to empower our customers to get the best out of their business, by supercharging their data and using it to make bolder, better and crucially, more successful decisions. For example, with the launch of our game-changing, data-driven tool Pulse, we facilitate access for SMEs to gain the insights needed to grasp growth opportunities as soon as they arise.

Looking to the future and the uncertain outlook for small to medium enterprises in the current economic climate, it seems likely that demand for sophisticated fintech lending will accelerate further. Optimising the ways that business finance providers can meet the needs of their clients by leaning on fintech capabilities is absolutely crucial, if British business is going to reach their true potential at a time of unprecedented change and volatility.