New Whitepaper: The State Of European SME Lending

Access to financing remains one of the biggest hurdles for European small and medium-sized enterprises (SMEs). Despite forming the backbone of Europe’s economy, many SMEs still face significant challenges in securing timely and affordable loans. Traditional lending practices — with their high fixed costs, regulatory barriers and outdated manual processes — often make it unprofitable for banks to serve smaller-scale and shorter-term financing needs. As a result, many SMEs are underserved, despite their high demand for financing.

In a new whitepaper titled The State Of European SME Lending, Teylor — in collaboration with the consulting firm INNOPAY — explores why this gap has persisted for so long. However, it also signals that the SME lending landscape is transforming. The report highlights three key trends that are reshaping access to SME financing:

1. Technological innovation: AI, machine learning and open banking APIs are speeding up data collection, analysis and credit decision-making, allowing fintechs to offer faster, more user-friendly lending experiences.

2. Alternative capital providers: Private debt funds are expanding their role, providing quicker approvals and serving SME segments that traditional banks often deprioritize.

3. Embedded lending: Financing is increasingly integrated into everyday business software platforms, making it more accessible and convenient for SMEs while changing the traditional bank-SME relationship.

The whitepaper also discusses the strategic choices facing traditional lenders — from building in-house capabilities to partnering with fintechs — and why timely innovation is crucial to avoid disintermediation.

Download the whitepaper here.