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Closing the funding gap for SMEs across Europe

Closing the funding gap for SMEs across Europe


In January 2024, YouLend, the leading global embedded finance platform, announced the completion of a private securitisation transaction with J.P. Morgan to extend £4 billion in additional revenue-based financing to small and medium-sized enterprises (SMEs) across the UK and Europe.

Business Express sits down with YouLend CFO Anders Torpe Christoffersen to discuss what this deal will mean for the business and its SME customers. 

  1. How does this deal address a gap in SME lending across the UK and Europe?

Anders: Across the UK and Europe, there’s a considerable SME bank-financing gap of up to €400 billion, despite most (70%) SMEs depending on banks for their external financing. This leaves thousands of businesses without viable capital alternatives needed to grow their business. Embedded finance emerges as a pivotal solution for SMEs to enhance access to much-needed funding through e-commerce sites, tech companies, and payment service providers, directly at their point-of-need. 

The £4 billion SME financing facility from J.P. Morgan will enable us, in partnership with global platforms such as Amazon, Dojo, eBay, and Just Eat, to tackle this funding gap directly. 

Through this deal, YouLend will expand origination volumes drastically, reduce the cost of capital and offer more competitive rates and market-leading terms to SMEs in need of financing.

  1. Modern SME businesses require tailored financing solutions to thrive. How does YouLend deliver flexible solutions for small businesses? 

Anders: As SMEs increasingly embrace digital technologies, their financing needs and requirements evolve accordingly. YouLend has leveraged key strategic partnerships with e-commerce platforms such as Amazon, and payment platforms like Dojo and Mastercard, to access rich, direct-from-source payment data that can assess the creditworthiness of businesses faster and more accurately than traditional finance providers.

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The approach allows YouLend to move beyond the outdated traditional methods of underwriting, while at the same time offering a more personalised revenue-based financing solution to meet the individual needs of the SMEs in today’s digital landscape.

  1. What strides has embedded financing made in closing the funding gap for SMEs? 

Anders: Over the past decade, embedded finance has reshaped the financial landscape, revolutionising how small and medium-sized enterprises’ access affordable capital to grow their business. Its transformative impact has also fostered more equitable financial inclusion for SMEs. 

Our study with Experian, The Widening Access to Capital report, indicates that female-led businesses are more price-sensitive to the cost of external capital, compared to other groups. Embedded financing emerges as a promising avenue to break down such barriers through holistic and less biassed underwriting models, with embedded financing platforms like YouLend approving 30% of total funding for female-led businesses, compared to the UK average of only 12%

Our data suggests that SMEs have contributed £6.8 billion in SME revenue to the GDP across European markets and experienced a 26% uplift in sales in the 6 months following funding from YouLend. 

Overall, SMEs have shown a growing interest in external capital to manage cash flow, with 61% of SMEs now seeking external finance, and over half (51%) describing the affordability of new capital as poor.

Embedded finance providers such as YouLend are well positioned to close the SME funding gap across the Eurozone. Our latest deal with J.P. Morgan, enabling us to provide £4 billion in additional SME financing, is set to make significant strides in increasing the accessibility of capital. 


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