SMB Lending And The ‘Pay-As-You-Go’ B2B Future

In an always-on world, communication moves instantaneously, while payments remain a bit behind the curve — to put it mildly. Mired in paper though transactions may be, financial tech firms are moving to promote speed and to bridge the gap in lending between businesses and their suppliers or customers.

Yantra Financial Technologies said earlier this week that it has enabled lenders to deliver funds in real time, using a business bank account known as BlastPay. Yantra noted in a release that disbursement of funds can be initiated via application programming interfaces, commonly known as APIs, and can be facilitated across channels as varied as ACH transactions, cards and internal payments. Additionally, Yantra noted, the potential exists to “transform traditional approaches to direct deposit, money transfers, payroll, as well as the disbursement of loans.”

Suresh Ramamurthi, CEO of Yantra Financial, said in an interview with PYMNTS that BlastPay helps “bridge a gap in liquidity” — one that can be as simple as a firm (or individual) looking to buy an item or service yet not having the funds available to do so, even during the loan process. The traditional bank loan, said the executive, can take months to wind through the path between initial application and disbursement. “The purpose of a bank is to meet this need,” said Ramamurthi, and yet, the documentation and the underwriting process can be unwieldy. “The challenge is to speed up the lending process.”

For a small business, which can make hundreds of transactions per month, said Ramamurthi, the cash cycle can be burdened by the use of paper checks (still a hallmark of vendor payments). It can be burdened even further while waiting for a loan to come through, and in the case of BlastPay, funds can be made available instantaneously as soon as a loan is processed and approved, which means the loan application process can be truncated to a few minutes. The streamlined release of funds through online application and instant payments offers value across any number of use cases, said Ramamurthi, such as insurance companies paying out claims (issuing funds immediately on approval) and outside of normal business hours.

Similarly, in B2B transactions, supply chain and vendor management becomes easier, and orders and payments can be done in an efficient manner. In essence, said the CEO, businesses can adopt a “pay-as-you-go” model, ushering in “a dramatic change over the next five years,” where the model of banking, founded on mindsets that revolve around “30 days, 90 days or 120 days” for payments timeframes, falls by the wayside and lending becomes focused on products and services needed immediately. And with the real-time disbursement and tracking of cash (and repayments), cash flow becomes visible in a manner that makes back-office reconciliation easier as well, said Ramamurthi.