We see the terms Fintech, MarTech, and EduTech cropping up in articles regularly and often are not sure what they mean. Tech people will explain that each of these is designed to make the respective industries simpler and provide ways of streamlining services for the financial market, marketing, and education.

In the case of ProfitShare Partners, the Fintech company founded by CEO Andrew Maren, clients who have a signed order from a corporate or Government entity can access the funds they need to fulfill this order simply by filling in an online form and providing proof of the contract and – in just a few days, getting a response. In many cases, a positive and life-changing one!

But how does a Fintech like PSP differ from traditional banking when applying for capital? Here’s a simple comparison between the two…

Traditional banking vs Fintech business application for finance

Traditional banking

Documentation: Banks require extensive documentation and paperwork, including financial statements, business plans, banking track record/history, and collateral.

Length of process: The application process is lengthy and can take several weeks or even months for approval.

Approval criteria: Credit history, collateral, and established business track record must be scrutinised carefully, and meet the requirements of the individual bank.

Personal interaction: In-person meetings with the bank’s representatives are common.

The decision: Loan decisions are often centralised and follow rigid guidelines; if your business requirements do not meet a particular framework for the size of your business and the amount of capital you need, banks may have to turn you down.

Flexibility: Limited flexibility in the terms offered by the loan, and repayment structures.

Disbursement: Funds may take time to be disbursed after approval.

Interest rates: Generally follows standard interest rate structures, which may depend on your credit history.

Fintech loans/capital provision

Documentation: Requires minimal documentation, usually digital and streamlined.

Length of process: The application process is quick and can lead to rapid approval. In the case of ProfitShare Partners, your application is reviewed when it arrives and a quote is sent to you within 48 hours.

Approval criteria: Fintech employs alternative data sources and technology for credit assessment, accommodating startups and businesses with limited credit history.

Personal interaction: Primarily, a single online application process with limited face-to-face interaction, if any.

The decision: Artificial intelligence (AI) and data analytics are employed to provide data-driven decision-making.

Flexibility: Offers more flexible loan terms and repayment options tailored to specific business needs.

Disbursement: Funds are disbursed on approval.

Interest rates: Interest rates may vary, and some Fintech lenders use dynamic pricing models.

Note that traditional banking still has advantages in terms of established relationships and stability, but Fintech business loan applications tend to be more streamlined, accessible to a wider range of businesses – and SMEs in particular – and provide speedier access to funding compared to traditional banking.

“What we’re seeing now,” says Maren, “is collaboration or partnership between a large bank and a successful, agile Fintech, to ensure SMEs – in particular – get that crucial leg up to success rapidly and professionally.”