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Plaid and Codat join forces to bolster UK SME lending

The two fintechs are hoping to streamline the lending process for SMEs in the UK.

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Financial API providers Plaid and Codat have teamed up to help SMEs get access to better lending.

The partnership will enable small businesses to share a broader view of their finances, including bank data from Plaid and accounting and e-commerce data from Codat, instantly with third-party lenders.

Plaid and Codat are hoping that this latest partnership will streamline the whole lending process, helping SMEs overcome obstacles to obtaining the financial assistance they need.

Richard Kotite, head of UK partnerships at Plaid, said: “Plaid’s API supplies user-permissioned banking data, which means transactions data comes from a trusted bank source, while Codat’s API provides access to contextual accounting, POS (point of sale), and commerce data.”

“Accessing data from these two sources allows lenders to form a more complete and verifiable understanding of a business customer, beyond what’s available from credit reference agencies, via one simple API integration.”

As well as helping SMEs get access to more lending, the partnership will also help fight fraud.

By using Codat’s API to delve into a company’s financials and Plaid’s open banking data, lenders can corroborate the financial information they’ve been provided with to ensure they are lending to the right company. 

Lenders will also be able to tailor the loan to a particular SME’s financial needs and track changes in their financial health through open banking.

Earlier this month, Codat launched in the US and received strategic investments from both PayPal and American Express. 

In February 2021, Plaid teamed up with Durham-based digital bank Atom to launch a new service helping SMEs access Atom’s loans. 

By using Plaid’s open baking platform, Atom is able to verify incomes, derive affordability, identify and mitigate risks associated with outdated information and lagging data, not dissimilar from its collaboration with Codat.

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