The move will make it easier for smaller businesses in Finland to obtain the growth financing they need to expand, including the unsecured business loans rarely available from conventional banks. SME Finance also lends to businesses with trading histories shorter than the two-year minimum normally demanded by mainstream banks.

SME Finance’s entry to the local Finnish market comes after rapid growth in Lithuania, from where it has already provided more than €1 billion in working capital to over 2,000 growing businesses, primarily in the Baltics.

The lender puts its focus on SMEs, as it believes this sector is underserved by mainstream banks. SMEs are the backbone of modern economies. They represent 99% of all businesses in the European Union, employing around 100 million people, just under 43% of the total in the European private sector. In Finland, just under 230,000 SMEs account and 65% of employment.1

In common with most other countries, smaller businesses are often overlooked in Finland by traditional banks, who regard their needs as uneconomic to service. Finland has a highly-concentrated banking sector, with the top three banks controlling 80% of the business market.2

Many entrepreneurs say they feel left out by banks’ tick-box lending criteria, which fail to take growth potential into account. As a result, many SMEs remain under-financed and at-risk of serious business challenges. Data from the European Central Bank (ECB) shows that accessing business finance becomes more difficult as business size decreases.3

SME Finance has brought its new digital-first approach to growth financing to Finland, a country known for its openness to innovation. The nation has a highly digital economy, projected to be cashless by 2029. It is top of the digital leaderboard in the EU’s Digital Economy and Society Index (DESI) for 2020, and seventh in the Global Innovation Index for 2021.

SME Finance believes its digital-first approach to banking and finance is a strong match for local business owners’ needs. Its Smart Loan, for example, offers an alternative to the traditionally slower, more conservative and potentially biased lending practices of traditional banks. The use of AI and open banking APIs shortens and simplifies the business financing process, and introduces unbiased lending criteria based on contextual trading and cash flow data. The lending decision takes less than one hour and the loan is transferred within 24 hours. The data can all be provided remotely and digitally, reducing the bureaucratic burden on businesses when borrowing to expand.

SME Finance’s Country Manager in Finland, Matias Peltoniemi, says: “Finland’s small businesses are not alone in facing a massive funding gap, put at €2 billion by the ECB. What we have on our side, however, is an openness to the sort of innovation and digital solutions that SME Finance is bringing to the local market. SME Finance offers a fairer, faster way for smaller businesses to access growth financing, even unsecured loans for startups with less than two years’ trading history.”

SME Finance is planning further expansion in 2022 in the Netherlands, Spain, and Germany.