Why digital lending is good for your business

The practice of obtaining credit through digital lending refers to the method of doing so online. The growing prevalence of smartphones, the adaptability of credit ranges, and the rapidity with which transactions may be completed online are some of the factors that have contributed to the rise in the product’s popularity among modern lenders. There are many online platforms that are good at money lending in Tanjong Pagar that you can access. Through carefully managed cost levers at each stage of the value chain, digital lenders, working in collaboration with traditional lenders, are overcoming the most significant obstacles that stand in the way of providing credit.

Why do micro, small, and medium-sized enterprises (MSMEs) favor digital lending over traditional lending?

Those individuals who are unable to obtain credit from conventional sources of financing, such as banks, are the ones who are most likely to favor the use of digital lending. One of the most important illustrations of this is the escalating rate of adoption among micro and small management enterprises (MSMEs). After the Covid scandal, micro, small, and medium-sized enterprises (MSMEs) were unable to obtain financing through traditional lending institutions and were forced to turn to online lending platforms as a result. This resulted in a massive increase in the popularity of online lending platforms among MSMEs. The rapid turnaround time and onboarding, straightforward KYC procedures, and disbursement within minutes are some of the features that have drawn cash-strapped MSMEs toward these digital methods to get loans.

A lack of regulation, which in turn leads to a lack of trust in the system

This type of digital lending, like any new business activity, has several flaws that need to be fixed before it can be considered fully functional. There have been numerous cases of unethical behavior that have been brought to light, particularly during the pandemic, when unlicensed lenders supplied customers with loans without any assets and at inflated rates, along with totally unrealistic deadlines to pay off these enormous debts. These instances of unethical behavior have brought to light a multitude of instances When borrowers were unable to repay their loans, this led to the lenders pressuring them to collect the money owed to them. In such instances, the borrowers have no choice but to comply. The lack of trust that customers feel as a result of occurrences such as these is ultimately detrimental to the expansion of the digital lending industry.