Bank for International Settlements Releases Findings of Fed Study on Impact of Fintech Lending on Access to Credit for US Small Businesses

Research finds small business fintech platforms have potential to create a more inclusive financial system

DENVER – October 3, 2022 – The Bank for International Settlements (BIS) and the Federal Reserve Bank of Philadelphia recently published research analyzing proprietary loan data from Funding Circle, the leading online platform for small business loans, and other fintech data for small businesses. Data showed that fintech small business lending (SBL) platforms are using alternative data to improve credit scoring and increase access to capital at lower cost for borrowers who are less likely to receive credit from traditional banks .

The study found that, compared to traditional banks, fintech SBL platforms lend more frequently in zip codes with higher unemployment rates and higher bankruptcy filings. Using internal credit scores has also allowed Funding Circle to lend to many business owners who may not have had access to bank loans due to their FICO score, improving access for small business owners. equity-based businesses and offering greater financial inclusion.

During the pandemic, banks have prioritized processing PPP loan applications from existing business customers, leaving small businesses at risk of bankruptcy. Fintech SBL platforms have stepped up to bridge this credit gap by following a peer-to-peer lending strategy and partnering with community banks to reach new customers. These partnerships have allowed smaller banks to band together to create a greater share of PPP lending, accelerating lending to small businesses that did not have existing relationships with banks at the start of the pandemic.

“Small businesses continue to face post-Covid challenges, economic uncertainty and insufficient access to credit,” said Angus Sander, Chief Revenue Officer and Vice President of Products at Funding Circle US. “The results of this study reinforce the importance of fintech small business lending platforms for the current and future health of small businesses in our country. Funding Circle is proud to support and expand access to capital for small businesses across the country.

The results of the study also revealed that the internal credit ratings used by SBL fintech platforms, and more specifically the risk ratings assigned to loans by Funding Circle, were able to predict future loan performance with greater accuracy than the conventional method of credit scoring, leading to a better loan. performance. In addition, the study results confirmed that the information used by Funding Circle to rank loans according to risk is superior to that of risk measures from FICO or VantageScore.

Overall, the findings of this study underscore the critical role that SBL fintech platforms play in supporting small businesses and creating a more inclusive financial environment. Today, the role of SBL fintech lenders is more important than ever as small businesses seek help in dealing with inflation, rising interest rates and market volatility.

As the report notes, “we have demonstrated the potential of what fintech platforms and their use of alternative data could do to move us towards a more inclusive financial system. As collaboration and partnerships grow between traditional banks and fintech companies, they would become more efficient at using borrower data using today’s technology and likely to work together to improve financial inclusion and overall economic performance.

For more information and to learn more about Funding Circle’s solutions, visit

About the Funding Circle

Funding Circle (LSE: FCH) is the leading online lending platform for small and medium-sized enterprises (“SMEs”). Since its launch in 2010, investors and lenders, including banks, community development financial institutions, specialized finance companies, asset management companies, insurance companies, government-backed entities and funds, have invested approximately $19 billion in more than 130,000 companies worldwide.

For all media inquiries, please contact:

Julia [email protected]


Affordable business financing. Crazy fast.

Funds are delivered in days, not months.

Comments are closed.