In Brazil, where 99% of companies are small and medium-sized and account for more than half of formal employment, access to credit is still one of the biggest challenges for businesses. The problem is not new, but remains as an invisible barrier that suffocates opportunities, limits investments, and reduces growth potential.
According to SEBRAE data, there are 6.4 million establishments in the country, of which more than 6 million are small and medium-sized enterprises. However, in practice, a large part of these companies face a financial market structured to serve giants, not small entrepreneurs.
The expert Gabriel César, CEO of M3 Lending, a fintech that facilitates access to credit for companies, comments on the subject. He points out some of the main difficulties faced by SMEs, such as bureaucracy, strict requirements, and lack of credit history, barriers that limit the growth of these companies. But do not worry, there are alternatives to overcome them. Check it out:
1 – Requirement for Collateral
The requirement for collateral is one of the biggest challenges faced by SMEs in seeking credit. Most of these companies do not have enough assets or assets to offer to banks, which restricts their financing options and makes credit inaccessible to businesses, especially those in the consolidation phase. This scenario limits the growth of companies since, without access to adequate credit, they face difficulties in investing in expansion, modernization, or improving their competitiveness.
Furthermore, since SMEs are considered riskier due to their nature and size, financial institutions tend to require more robust collateral, such as high-value real estate or equipment, which often is out of reach for these companies. This causes many entrepreneurs to fall off the radar of traditional lines of credit.
2 – Credit History
Another major challenge faced by SMEs is the lack of a credit history, making it difficult to access financing. To build a good financial reputation, companies need to obtain credit, but without a prior history, banks often refuse loans. This vicious cycle hinders the growth of small businesses, limiting their opportunities for expansion and investment.
Additionally, many entrepreneurs struggle to prove their ability to manage finances and generate profit, important factors for obtaining credit. Thus, alternatives like personal credit are often more expensive and not ideal for sustaining the long-term growth of the company.
3 – Financial Disorganization
Financial disorganization is also a bottleneck when it comes to seeking credit. The lack of precise and well-structured information makes it difficult for banks to analyze the financial health of the company. ‘Without organized balance sheets and formal documentation, many businesses cannot even begin a credit application. The difficulty in meeting bureaucratic requirements not only delays the process but also frustrates entrepreneurs, who end up wasting time and missing opportunities,’ explains César.
Therefore, financial organization should not be seen just as a bureaucratic issue, but as a strategic tool for the company’s success. Adopting good financial management practices, such as maintaining rigorous accounting records, planning cash flow, and organizing tax obligations, is essential not only to facilitate access to credit, but also to ensure the long-term sustainability and growth of the business.
4 – Choose the wrong line
Furthermore, choosing the wrong line of credit can become a real trap. “High interest rates and terms misaligned with cash flow often result in even more serious financial imbalance for SMEs,” warns the CEO. For those already facing difficulties, such as pending debts and a history of default, the challenge becomes even greater. “Financially troubled companies are seen as high risk, and banks’ response is usually the same: denial,” he adds.
Additionally, many financial institutions offer credit lines that seem advantageous at first glance, but over time, prove to be harmful. The lack of a more detailed analysis of the company’s financial profile can result in payment terms incompatible with SMEs’ revenue-generating capacity. This lack of proper planning can even lead to the bankruptcy of businesses that, under other circumstances, would have the ability to recover.
Platforms assist with higher values and lower interest rates
In this way, alternatives such as fintechs and digital credit platforms are gaining strength. M3 Lending, for example, relies on a direct connection model between companies in need of credit and investors looking for profitability. “Interest rates are 22% lower than those practiced by conventional banks, as well as a digital and streamlined process,” says César.
The fintech’s proposal is to unlock credit for SMEs in an accessible, transparent, and less bureaucratic way. “Our goal is to give small and medium-sized enterprises the opportunity to grow without being hostages of a system that often does not see them as a priority. Technology allows this, and we are here to bridge that gap,” concludes the CEO.
Founded in Belo Horizonte (MG), M3 Lending began its operations in 2021. The fintech connects small and medium-sized companies seeking credit to investors, primarily individuals, who wish to allocate capital to these businesses. With just R$ 250, any investor can join the platform and diversify their investments, while boosting the growth of Brazilian entrepreneurs.
Currently, there are already over 2,000 people connected to M3, both as credit takers and investors, the CEO reports. “It is a more inclusive financing model, connecting, on one side, those in need of working capital, and on the other, those looking to invest, contributing to the growth of businesses.”
Among the main reasons for seeking credit, according to the company, are: purchasing new inventory (20%), opening new units (25%), expanding facilities (15%), and expanding operations (40%). “This shows that companies are seeking credit to grow and strengthen working capital,” highlights Gabriel Sousa César, CEO of M3.
This way, the fintech can offer better credit conditions – even compared to conventional banks. For the same case, the amount made available can be more than 50% higher than what a traditional financial institution would offer, calculates the CEO.
