We recently asked 800 SME businesses about their experiences with regards to external financing. From 'anxiety inducing' to inaccessible, financing continues to be experienced as a bottleneck by many - not least in turbulent times. The fun news? Data sharing is on the up and up.

Last summer, we conducted an extensive survey among more than 800 SME businesses in Sweden. Distributed by Netigate, our survey only included businesses that currently use or recently used external financing.

As we all know, 2023 was – and 2024 continues to be – heavily marked by macroeconomic turbulence, inflation and higher interest rates.

This naturally affected the SME financing landscape.The apparent mismatch between the needs of lenders and borrowers got worse. For a large chunk of SME businesses (36%), the need for financing actually increased as they looked to invest & expand or manage their cash flow. Simultaneously, lenders pulled back on their risk appetite, whilst rising interest rates made borrowing more expensive. Far from ideal.

A key factor in all this is access to real-time financial data, through data sharing. Fresh data ensures that lenders have the latest financial information available. It empowers them to make more informed and personalised credit decisions, and, ideally, make financing available for more entrepreneurs.

The latter part of our survey looked into data sharing as an opportunity to improve capital allocation among SMEs. While we've long recognised the need among lenders to acquire up-to-date data, it's encouraging to see that SME businesses are embracing data sharing too. Let's delve into the results!

The bad news: SMEs view the financing landscape in a negative light

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A resounding 93 percent of businesses had something negative to say about the quality of financing options available to them. Expensive prices were, perhaps unsurprisingly, the top concern. Below, the top-of-mind associations SME businesses have when it comes to securing external financing.

It’s expensive - 43%

High requirements on security - 30%

It’s slow - 27%

It’s anxiety inducing - 25%

Hard to access - 22%

Heavy admin/hassle - 21%

Lenders don’t understand our business - 14%

Decisions are made on outdated information - 12%

Offering isn't tailored to SMEs - 11%

Good enough for our needs - 8%

It’s smooth - 7%

It’s fast - 7%

Plenty of choice - 5%

Customer service is excellent - 1%

Provided that your lending business has a reasonably modern tech stack, you’ve probably ticked off many boxes on the quest to deliver a delightful customer experience; one that’s neither slow nor anxiety inducing.

Either way, this list provides an indication as to what lenders should focus on. For instance, you could differentiate your service by providing top notch customer service or more attractive pricing. One thing seems sure: there's plenty of opportunities to become the first lender that a given SME actually is delighted by.

Only half of SMEs think that legacy banks pull their weight

53 percent thought that yes, major banks in Sweden take their responsibility in making financing available for small and medium sized businesses. 31 percent disagreed, whereas 16 percent were not sure.

The fact that banks aren't the obvious first choice of many SMEs can partly be attributed to the growth of alternative lending, driven by fintech lenders. Roughly half of SME businesses in Sweden are now securing their capital from a non-bank lender, showed a survey we conducted together with Capcito, our sibling company, in December 2022.

The good news: Majority of SMEs are open to data sharing & proactivity

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Eight in ten (82%) of businesses are ready to share their accounting data with a lender they consider reliable – in exchange for the following value-adds.

28% - would share their data for better prices

17% - better/more accurate credit assessments

17% - better customer service

14% - a higher credit limit (i.e. being able to borrow more)

6% - faster approvals and/or payouts

According to our results, 6 percent don’t want to share their data at all, whereas 12 percent are undecided. This trend shows that businesses, like consumers, are warming up to the benefits of sharing data in exchange for smarter and more transparent financial services.

The responses also underscore that SME businesses are price sensitive. This indicates that finding ways to compete on prices & individualised offers can unlock major growth for lenders.

For instance, if you establish solid data sharing practices, it could result in a higher degree of automation in data collection and reduced overhead costs. The savings from more efficient processes could then be translated into lower rates and fees.

The main opportunities of using real-time, however, usually lies in making more informed decisions. Over the long term, data-driven credit processes will unlock one or all of the following benefits:

• Growing your loan book by finding new business opportunities
• Forming closer customer relationships, improving satisfaction and reducing retention
• Redefining your offering, by having more dynamic pricing, credit limits, etc. based on the business' ongoing financial performance.

Is your lending business ready to capitalize on this trend, and offer your customers seamless data sharing & ERP integrations?

In case you need capabilities to facilitate data sharing with your prospective or existing customers, simply get in touch at hello@monto.ai, or check out our Docs and **Getting Started Guide *to learn more. 

Half of businesses would appreciate proactive lending offers from their lender (!)

To this day, lending is a transactional proposition. Apply for loan. Get loan paid out. Repay loan. Repeat.

What data sharing promises, is that financing – not just through loans but also invoice discounting, etc. – can become a more long-term and automated service, that businesses can use on demand.

For lenders, Open Finance indeed promises to unlock new ways of becoming a proactive partner to borrowers. By understanding the needs and circumstances of SME businesses from month to month (through real-time data), and tailoring the right type of offers based on insight, lenders will become better equipped to satisfy and retain their customers.

Our survey shows that this is no pipe dream; businesses are excited about this development, too.

"Would you appreciate if a lender proactively offered you financing services, even before your need for capital became pressing?"

50% - Yes

24% - No

18% - Don't know yet

8% - I don't want to share real-time data

To summarise, half of the respondents would like lenders to monitor/forecast their financials continuously, with the goal of supporting growth and/or liquidity through add-on financing. Sounds like an exciting future.