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YouLend Provides Lifeline for SMEs With 26% Seeing an Increase in Sales After Receiving Funding

YouLend, a global embedded finance platform, has attracted 12 per cent more applications from female-led businesses and is more than twice as likely to finance female-led businesses than the UK average, a new report reveals.

These figures come from YouLend’s new report in partnership with Experian, a global information services company, titled, The Widening Access to Capital Report. It indicates that embedded financing models are more effective than traditional banks in providing capital to female-led SMEs.

Analysing over 100,000 cases of merchant financing from YouLend and comparing it to Experian’s data about the market, the study also uncovered that last year YouLend offered 90 per cent approval rates for applicants. This is above the 64 per cent average in the UK.

Commenting on the findings, Mikkel Sølvsten Velin, YouLend co-founder and co-CEO, said: “Our report confirmed that female-led businesses face more barriers when accessing much-needed finance than male-led businesses do. Positively, we also found that embedded finance can break down those barriers through new distribution channels and unbiased underwriting models.

“Whilst we are proud of our social impact at YouLend, there is much more to be done to ensure equitable access to finance for businesses in the UK, particularly during the cost of living crisis.”

Embedded finance is a force for good

The study reveals that embedded financing models are generally more effective in providing capital for underserved communities in the UK. Embedded finance models place financial products in a nonfinancial customer experience, journey, or platform without redirecting to traditional financial institutions. This allows excluded groups to apply for flexible, agnostic, and affordable financing.

For example:

  • Over half (58 per cent) of YouLend’s SME capital segment went toward the two most deprived regions in the UK
  • Twenty-nine per cent of all applications YouLend receives are from female-led businesses, outperforming the national average of 17 per cent on application and approvals

An SME lifeline

SMEs have shown a growing interest in external capital to manage cash flow. In fact, 61 per cent of SMEs saught external finance for working capital in 2022.

However, despite the rising number of loan (20 per cent) and overdraft (11 per cent) applications quarter-on-quarter, businesses’ success rates have fallen from 80 per cent in 2021, and 60 per cent in 2022. As a consequence, gross capital lending declined from £4billion in Q4 2022 to £3.7billion in Q1 2023, representing a year-on-year decline of 24 per cent.

Research from Q1 2023 also found that just 12 per cent businesses described the affordability and availability of new finance as good, with over half (51 per cent) saying it is poor or very poor.

Overall, in 2023, SMEs faced severe economic uncertainty yet continued to grow with the support of financing options. However, YouLend has been able to help these organisations.

By the end of H2 2023, YouLend estimates that loans under management have contributed £6.8billion in SME revenue to the UK GDP. Businesses saw a 26 per cent increase in sales within six months of receiving funding, surpassing market averages

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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