Alternative funding models for small businesses do not have to be a threat to the banking industry, says Katrin Herrling, chief executive and co-founder of Funding Xchange, a finance broker that simplifies the funding process for small businesses through technology.

“I don’t think the answer has to be that bank funding should be available for all. I do believe there are different models and different ways of engaging with businesses where the bank is just one of many different options”, said Herrling.

She made the comments during a 30-minute interview with Lindsay Town, the CEO of IAA-Advisory, as part of LTi Technology Solutions’s Leasing Leaders Series, a series of conversations with leaders in the UK leasing industry.

Herrling, who is the first fintech leader to be interviewed for the series, added that banks were less able to take risks with the businesses they chose to fund, which was “absolutely fair” given the amount of other people’s capital they were responsible for. However, it did mean there was room for alternative funding models within the market.

The idea for Funding Xchange came after a meeting in which Herrling, who had gone to see her bank regarding capital for her family’s dairy farm, was told that the costs associated with re-capitalising their balance sheet would be much higher than she had anticipated.

“I remember walking out and thinking, ‘Where am I going to take my business?’ I was thinking about what my options were and I must admit I didn’t realise there weren’t any options I could easily access,” she said.

Herrling decided to use her experience and knowledge of the commercial lending industry in Europe to create a faster, easier way for small businesses to access funding. She said that when the company launched seven years ago, its goal of allowing businesses to access funding within 2 weeks was considered “very aspirational.” However, technological advances have greatly changed what is possible.

Despite technology being a key part of Funding Xchange’s service offering, Herrling says  that “the ability to have human interactions and real face to face conversations will always be important in our sector.”

The ‘LTiConnections: Leasing Leader Series’ interviews are free to watch and will be followed by a live Q&A session with the interview guest and interviewer, alongside LTi’s Robert Taylor.

“We want to appeal to new recruits in asset finance as well as explore the essence of being a leader in this industry,” said Taylor.

Registration is required.

Click HERE to register for the Zoom Webinar.

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