Uplinq, Visa Team to Help Small Businesses Access Funding

Credit decisioning platform Uplinq has teamed with Visa to help small businesses access credit.

The collaboration, announced Wednesday (Aug. 30), is designed to help lenders reduce risk while also giving American and Canadian small business owners access to fair credit.

“Having fast access to working capital is important for businesses of all sizes, but especially vital to small businesses who serve as the backbone of our global economy,” Matt Baker, Head of Small Business, Visa Commercial Solutions, said in a news release.

“Through this strategic collaboration, we look forward to introducing Uplinq’s advanced credit decisioning technology to our financial institution clients across the U.S. and Canada to ultimately help more small businesses in both countries,” he added. 

According to the release, Uplinq helps small business lenders go beyond traditional company financials and credit scores in order to “better understand the entire ecosystem of a business” before deciding whether or not to lend.

Uplinq’s platform, the release said, leverages billions of alternative data sets from more than 150 countries, including factors such as market, community and environmental conditions, into its assessment. The company said its technology has been a foundation for more than $1.4 trillion in underwritten loans around the world.

PYMNTS spoke with Visa’s Baker earlier this year about the need for small business lenders to look past their standard considerations for loans.

Many financial institutions, he told PYMNTS CEO Karen Webster, are “relying on the older ways of underwriting — using the small business owner’s personal FICO score,” or in cases where there’s enough history, the business credit score. Just 50% of small business credit card issuers surveyed by Visa, Baker said, are using business credit scores in underwriting. 

Using just personal scores, he argued, is limited in scope, where consumer-based repayment history may not provide lenders with a full picture of a would-be borrower’s creditworthiness.

Baker also said there’s a competitive advantage to digging deeper, as 50% of small businesses say they would spend more with a higher credit limit, while 30% of them said increased access to credit led them to switch financial institutions.

Meanwhile, small businesses are facing increased pressure, according to the recent S&P Global Flash U.S Composite PMI (purchasing managers’ index).

The PMI for August showed that manufacturers “dipped back into contraction” as production dropped again, while service providers saw growth slow to the lowest pace since February. Weakened client demand fueled the slowdown across the economy, as total new orders fell for the first time in six months.

“The pace of activity seems to anticipate the risks of gauging end market demand in an uncertain environment,” PYMNTS wrote last week. “A reduction in output signals that expansion plans on the part of companies themselves are being reined in.”