Who makes up the SME lending ecosystem?

What is the SME lending ecosystem? 

In times gone by, business finance lenders tended to work in isolation. And by business finance lenders, we’re talking about the “traditional” high street business bank. 

Then, over a relatively short space of time, other types of lenders started to emerge. 

Business owners found they could find finance through lenders specialising in specific types of finance, e.g. asset finance, or those catering to specific industries, e.g. property. 

 Fast forward to today and there are lots of lenders and flexible finance products on the market. Businesses can choose from unsecured finance, asset finance, property finance, bridging loans, revolving credit facilities, merchant cash advances, green finance options – the list goes on and it's growing every year.

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Now, because there are so many business finance lenders and types of business finance out there today, the business finance landscape is becoming increasingly competitive. 

As such, firms in the sector are beginning to form an ecosystem.

According to National Geographic, “an ecosystem is a geographic area where plants, animals, and other organisms, as well as weather and landscape, work together to form a bubble of life.” 

That’s what’s happening to the business finance sector. 

Firms are beginning to work together rather than in isolation, because ecosystems are all about participation and collaboration. 

This ecosystem is also being catalysed by Open Banking.

 Open Banking lets customers share some of their financial data with authorised third parties. The aim is to provide SMEs who may have previously been overlooked with access to more customised finance products, while speeding up the application process.  

Because of Open Banking and the increasingly competitive landscape, SMEs’ banking habits have changed. Instead of having to rely on their business bank for funding, they can access products from numerous financial services providers.  

Banks –  and other types of lenders, for that matter – can’t rely on their customer base like they used to be able to. To compete, they need to adopt a customer-first mindset and prioritise integrated digital experiences that meet their customers’ needs. 

That’s where Funding Cloud comes in. 

Where does Funding Cloud fit into the SME lending ecosystem?

Funding Cloud supports the SME lending ecosystem. 

It uses API technology to connect businesses, lenders and other partners in the business finance sector in order to facilitate fast, accurate and secure access to funding at scale.

You can think of it as a kind of National Grid for SME finance in the sense that it unites all the SME finance options. Like electricity that is delivered through the Grid, businesses can use Funding Cloud as a resource to power their growth.  

By aggregating a wide variety of lenders and removing barriers to funding, Funding Cloud is empowering more businesses to access the funding they need to operate and grow. 

Instead of business owners having to spend time and resources researching which finance options they’re eligible for, Funding Cloud carries out precise lender matching and facilitates real-time decisions. 

The application process is simple, and by accurately validating business profiles using technology, business owners are matched to the sector’s biggest lender network in just a few seconds.

The Funding Cloud ecosystem is made up of the following partners:

- Lenders - e.g. Lloyds Bank, Iwoca, Funding Circle and FIBR

- Advisors - e.g. Cooper Parry, Smith & Williamson and Vallabh Associates 

- Acquisition Partners - e.g. Smallbusiness.co.uk, Money.co.uk

Funding Cloud benefits lenders in the ecosystem by opening up their products to a wider audience. It also benefits partners, such as accountancy firms, who can use Connect to match their clients with finance options at speed. 

 So, you could say that Funding Cloud is part of the ecosystem. 

 But – going back to the original definition of an ecosystem – you could also say that it provides the “geographic area” where lenders “work together to form a bubble of life”.  

(In this sense, it is the ecosystem.) 

For our economy to recover and thrive moving forward, everyone in the sector needs to work together to ensure that businesses can access the funding they deserve. 

If you want to join the Funding Cloud ecosystem, or if you’re a business owner in need of finance, start your journey towards a better funding future today. 

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