BankiFi and Praetura partner on fintech project to revolutionise small business lending

Manchester fintech company BankiFi is partnering with financier Praetura on a new lending-as-a-service solution that will boost SMEs’ access to growth funding.

The first-of-its-kind platform is designed to help small businesses access capital when they may otherwise not meet the criteria for traditional high street banks.

Praetura, backed by BankiFi’s tech platform, will deliver asset and invoice finance to SMEs on behalf of banks unable to support those businesses.

BankiFi and Praetura’s solution empowers traditional lenders to meet the diverse financing needs of the UK’s small businesses, with Praetura adopting the risk of the initial investment. Banks are then positioned as the go-to finance provider, with businesses referred back to the bank once they’ve grown into the eligibility criteria.

BankiFi, which has been backed by Praetura Ventures since September 2021, specialises in payment processing and financial administration services for SMEs. It claims it has been at the forefront of reinvigorating banks’ relationships with SMEs, emphasising the importance of putting banks at the heart of business. This renewed partnership further solidifies BankiFi’s commitment to closing the loop and providing a solution that aligns with demand from SMEs.

Mark Hartley, chief executive and founder at BankiFi, said: “We’ve built great relationships with high street banks due to our bank-friendly distribution model and our ability to leverage the benefits of open banking. Our partnership with Praetura is the natural evolution of our existing SME payment solutions, which have focused on reducing the time SMEs spend collecting money and helping them to manage cash flow, growth and now access finance.

Peadar O’Reilly, chief executive of Praetura Lending, added: “Praetura’s initial investment in BankiFi was driven by the shared vision of addressing market gaps for SMEs. There isn’t anyone in the UK that has the combined senior funding lines, specialist lending expertise and technology capability to help fund this gap for SMEs in the market. This unique partnership signals a new era for SME lending, demonstrating a commitment to innovation, collaboration and meeting the diverse needs of businesses.”

This solution is a response to an acute crisis in financing for SMES.

According to the Bank of England, banks asset or invoice finance books have closed, and those that do offer such facilities typically focus on larger businesses that are more likely to meet their lending criteria.

The BoE’s own research has found that all net growth in UK SME lending since 2017 has come from smaller banks or alternative lenders rather than traditional high street banks. Meanwhile, Praetura’s ‘Fund the Gap’ report, which surveyed more than 400 UK SMEs in 2023, revealed that almost three-fifths (59%) of UK businesses say access to capital has decreased in the last five years, with 43% reporting that it is one of the biggest challenges they face.

Hartley added: “The first place many businesses go to for lending is their bank. The problem is that they often don’t meet the eligibility criteria set out by the bank. In these cases, if they can’t secure a loan, they often fall through the cracks and remain unserved. What we’re able to offer through our partnership with Praetura is a solution that both banks and businesses need.”