Commercial Lending

Small Business Lending

Alchemy Launches Commercial and Small Business Lending SaaS Platform

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by Alchemy

Alchemy enters the commercial lending space with a fully embedded financing software to help commercial and small business lenders automatically approve applicants through integrated decision engine as well as servicing platform.

Alchemy Launches Commercial and Small Business Lending SaaS Platform 2022

Alchemy enters the commercial lending space with a fully embedded financing software to help commercial and small business lenders automatically approve applicants through integrated decision engine as well as servicing platform.

Small business lending landscape

Small and medium enterprises (SME) is the backbone of world economy. They play a major role in economic development, job creation and innovation. SMEs create up to 50% of employment world wide and they represent almost 90% of commerce conducted world wide.

SME, small business owners and entrepreneurs represents and generate over 40% of world wide gross domestic product or GDP according to the World Bank.

Entrepreneurs and business owners will create over 600 million jobs in the next 10 years according research and they will create 70% of all new jobs world wide.

Small business financing

Small business owners are less likely to receive funding or loans from large national or international banks. Instead, they rely on their own savings to bootstrap their business. Some of these small business owners are looking for ways to raise funds from their friends and family.

According to the the International Finance Corporation (IFC), there are 65 million small businesses or 40% of all SMEs in the world have unmet financing needs. In other words, small business owners need financing, funding to give them the boost they need to grow and expand their business.

$5.2 trillion of unmet demand

The resources and funds needed to grow their business is enormous. IFC estimates that there are at least $5.2 trillion dollars of unmet need every year from 65 million small businesses. To put it into perspective, the unmet need equals Japan’s annual nominal GDP. 

Disparate impact

Some parts of the world, for example, Europe and Central Asia, the unmet need is about 15%. However, looking at some other parts of the world, Latin American and Caribbean, Middles East and North Africa region has almost 90% of unmet need for small businesses to grow.

These SME or small and medium enterprises lacks access to formal credit. This inhibits the growth of these large economies and various international organizations are looking into ways to deliver much needed financial support to help 2 billion people to grow their own businesses and create jobs

What can we do?

First, the United Nations and various world wide organizations such as the World Bank are actively working to unlock resources needed to help small and medium enterprises to thrive and grow.

These organizations are forming advisory groups and lending services to clients in these regions, especially for those under represented segments such as women owned SMEs.

Secondly, these international organizations are help local governments to form and shape regulatory policies to support SME access to financing.

Lastly, there are infrastructure needs such as credit reporting system, secured transactions, collateral ledger platforms and ways to develop legal foundations for insolvencies such as bankruptcy protection and limited liability protections. 

Other knowledge and tools that supports customer relationships and inventory management are needed to help to develop a healthy and vibrant small business ecosystem.

Alchemy Commercial and SME Lending SaaS Platform

Credit information infrastructure and software platform 

There are many emerging markets such as Latin America that has started to explore credit information infrastructure where lenders and financing companies can underwrite small businesses by accessing the SME’s credit history and banking transactions automatically.

These fundamental building blocks enables lenders to tap into these critical pieces of information and provide an informed decision and offer financing and credit.

Access to lending operating software is becoming accessible as well. Alchemy along with other partners in Latin American and other parts of the world have build white labeled or private labeled software that can help to launch lending companies to start offering much needed financing products for millions of SMEs world wide.

Alchemy’s lending solution include installment loans, line of credit, revenue based repayment financing products as well as SME Buy Now Pay Later programs build for merchants that sells to small businesses.

Small business lending identity verification, cash flow and credit underwriting

There are 20 million and 200 million small businesses in the US and around the world. During the pandemic years, the United States government released a government backed aid for small businesses in terms of a forgivable loan if the small businesses meet certain criteria.

There were a rush of applicants to various lenders during that time and lenders discovered that most of their underwriting systems are outdated, not automated and certainly required many manual intervention to churn through hundreds of thousands of applicants in a matter of week.

Alchemy Small Business Lending Lending Infographics 2022

Identity Verification

Alchemy helped to develop some of those government backed lending systems and automated some of the crucial elements of the small business lending decision points.

To properly underwrite a small business, the lending software must be able to automatically verify the small business’s corporate information as well as the true owners personal identity. There are many personal identity verifications systems that are plugged into the Alchemy SME lending platform. We are able to automatically verify all of small business owners personal identity to provide a high level of confidence that these applicants are who they say they are.

When it comes to corporate identity, we have integrated many small business lending verification systems that can quickly verify the company’s registration date, status as well as their corporate standing with various state regulatory bodies.

Credit Underwriting

Credit underwriting comes under two folds as well. There are various credit bureaus that tracks corporate credit performance. Much like personal credit bureaus, these databases houses information on corporate financial responsibilities. They are tracking corporate credit cards, line of credit, installment loans that are reported to the credit bureaus.

You can monitor and detect any delinquencies or over borrowing behaviors from these credit reports. This will help corporate lenders to reduce the chances of inability to pay from their customers. 

Most of the time, small business owners are using their personal credit to operate their business. Borrowing against their person credit card or taking out personal credit to cashflow their business. Some times, these types of behavior work against the small business owners and lowers their personal credit rating or credit score. 

SME lenders needs to be aware of the fact that a major of the small business owner’s personal credit might not be where it should because they over leveraged themselves to support the growth of their business.

The combination of corporate credit rating and small business owner’s credit behavior is one of the fundamental aspects of SME loan underwriting.

Cash flow and account receivables 

Cash flow is another critical elements of SME lending underwriting decision. Identity verification, personal and corporate credit tells us the past history and behavior of the business but it may not necessarily tell us the current financial health of the business. 

Alchemy has integrated with partners such as Codat and Plaid that offers a deep dive into a company’s cash flow and financial stability. 

Often, lender asks themselves whether the small business is borrowing to survive or to thrive? The answer to this question lies within the small business’s cash flow and future cash flow from their account receivables. 

In other words, if the small business can’t generate enough cash to cover their expenses from time to time, either the business is at growth stage where the are burning cash faster than making them or the health of the business is deteriorating due to numerous factors. Be it product market fit or lack of marketing or advertising, these idiosyncrasies sometimes do show up in their corporate cashflow numbers. 

Sometimes, the current cash flow carries the business but their future account receivables or sales are tanking. The customer aren’t order as much as before or there’s a high level of customer churn due to various factors. There could be a down slide of customer service, or the quality of the product and service has suffered because of hyper growth. These phenomenons can sometimes show up in the small business’s future account receivables or orders placed by their customers for future delivery.  

Alchemy Launches SME Lending SaaS Platform

One of the biggest reasons why our customers love our platform is because of its simplicity of user experience both for small business owners and lenders. 

We’ve spent years perfecting our complete digitized and automated application process and decisioning engine as well as workflows that allows lenders to negotiate with their borrowers before a final offers is signed.

Our powerful loan management system can manage line of credit, installment loans and revenue based repayment structures. This system can manage disbursement of funds not only to small businesses but also directly to their vendors for direct payment.

The alchemy lending system also covers repayments, payment reminders, collections modules etc to help lenders to stay on top of their portfolio and investment. 

Our SMB system is ready and have been used by various lenders already. You can contact us for a demo or walk through our system yourself by visiting 

Launch with ease

If you are a small business lender that needs a modern lending system that’s connected with your sales tools and is adaptable to your specific work flow, please consider Alchemy’s new SME lending system. Our knowledgable sales staff and implementation engineering team will be happy to help you anywhere in the world. 

Team Alchemy