Big tech loans money to small business owners who have trouble with bank loans

More than 8 out of 10 small business owners reported a decline in sales. The Association of Small Businessmen announced on the 21st that the result of a survey of 1,000 small businessmen by commissioning an opinion polling agency Innovation Research. A store in the underground shopping center in Euljiro, Seoul on this day. [연합뉴스]

Big Tech’s wave of waves on the financial market begins. This is as competition for loans against small business owners, etc., who were in the blind spot of the existing financial sector, intensifies.

Sales flow, percentage of regular customers, customer reviews, etc.
Use for non-financial information loan screening

Naver lowers loan application revenue standards
Up to 50 million won at 500,000 won for 3 months

Naver was the first place to start growing the plate. It was decided to lower the loan threshold for small and medium-sized businesses entering Naver Shopping. During this month, Naver Financial decided to lower the standard for small business loan application from 1 million won per month for 3 consecutive months to over 500,000 won per month (for 3 consecutive months). If the conditions are met, it will lend up to 50 million won at an annual interest rate of 3.2 to 9.9% without any collateral or guarantee.

Naver Financial lowers the loan standard for small business owners from over 1 million won in monthly sales for 3 consecutive months to over 500,000 won for 3 consecutive months. [사진 네이버 파이낸셜]

Naver Financial lowers the loan standard for small business owners from over 1 million won in monthly sales for 3 consecutive months to over 500,000 won for 3 consecutive months. [사진 네이버 파이낸셜]

Naver Financial started a’smart store business loan’ with Mirae Asset Capital in December of last year. Previously, only small and medium-sized businesses with monthly sales of over 1 million won for three consecutive months were eligible to apply for loans. The reason why the loan application criterion was cut by half in just one month from the start of the business is thanks to the data accumulated over a month. Kim Tae-kyung, leader in charge of loans at Naver Financial, said, “There has been no delinquency among borrowers whose principal repayment has come,” and said, “The number of loan targets will increase by 40% compared to the previous one due to the relaxation of the standard, and the application standard will continue to be lowered.”

More than 8 out of 10 small business owners reported a decline in sales.  The Association of Small Businessmen announced on the 21st that the result of a survey of 1,000 small businessmen by commissioning an opinion polling agency Innovation Research.  A store in the underground shopping center in Euljiro, Seoul on this day. [연합뉴스]

More than 8 out of 10 small business owners reported a decline in sales. The Association of Small Businessmen announced on the 21st that the result of a survey of 1,000 small businessmen by commissioning an opinion polling agency Innovation Research. A store in the underground shopping center in Euljiro, Seoul on this day. [연합뉴스]

Naver Financial is able to lower the criteria for applying for loans related to sales because it uses not only financial information but also various non-financial information for loan review. It reflects sales flow, percentage of regular customers, customer reviews, and customer response speed.

To this end, an alternative credit rating system (ACSS) model was created. In the case of online businesses, it was conceived that bank loans were difficult because there were no stores to secure as collateral, and because they did not have any financial information since their inception.

Leader Kim said, “Even if an employee works for only six months, they have a lot of financial history, but there are quite a lot of cases where business operators do not.” “Naver has various data from smart store operators, so we can reduce these blind spots.” said.

The mid-interest rate individual business loans that Naver is focusing on is an area where other big-tech and fintech companies also scream. Kakao Pay is also preparing its own credit rating model to launch mid-rate credit loan products, and Toss Bank, which is preparing to launch, is preparing financial services for SMEs and small business owners in partnership with the Small and Medium Business Administration.

More than 8 out of 10 small business owners reported a decrease in sales.  The Association of Small Businessmen announced on the 21st that the result of a survey of 1,000 small businessmen by commissioning an opinion polling agency Innovation Research.  A store in the underground shopping center in Euljiro, Seoul on this day. [연합뉴스]

More than 8 out of 10 small business owners reported a decline in sales. The Association of Small Businessmen announced on the 21st that the result of a survey of 1,000 small businessmen by commissioning an opinion polling agency Innovation Research. A store in the underground shopping center in Euljiro, Seoul on this day. [연합뉴스]

Seo Byeong-ho, a senior research fellow at the Financial Research Institute, said, “Online small business owners with short business backgrounds and no business locations were in a blind spot where it was difficult to obtain loans from banks, which are existing financial companies.” “Thanks to e-commerce transactions among big tech and fintech, various data It is an area that can only be challenged by platform companies that have a platform.”

It is also focusing on resolving other blind spots. It aims at’Thin Filer’, which is difficult to obtain loans from existing banks due to lack of financial history. Leader Kim said, “After the novel coronavirus infection (Corona 19), the number of opening smart stores as a side job has increased. In the case of smart stores, the proportion of thin filers is high as newcomers and housewives challenge a lot.”

In fact, 60-70% of Naver Smart Store operators are in their 20s and 30s. As of the first half of last year, 5 million out of 12.71 million people classified as thin filers were in their 20s and 30s, although their access to bank loans is poor, but a new door has been opened.

The loan approval rate for thin filers revealed by Naver Financial was 52%. The average loan amount was 25 million won, and the loan interest rate was around 5.5% per year.

Reporter Ahn Hyo-seong [email protected]


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