AI Could Make Small Trade Loans Pay Off Again
When a company sells goods to a buyer overseas, it often has to wait 30, 60 or 90 days to get paid. In the meantime, it needs cash to keep running. Banks have historically been reluctant to lend against that wait, especially for smaller companies, because the cost of checking a borrower’s paperwork and creditworthiness […] The post AI Could Make Small Trade Loans Pay Off Again appeared first on…
In the world of international trade, companies often face a lengthy wait for payments, sometimes up to 90 days, while they need immediate cash flow. Historically, banks have been hesitant to provide small loans due to the costs associated with assessing borrowers' paperwork and creditworthiness. This disparity in lending potential reached $2.5 trillion worldwide in 2025, unchanged from the previous year, as per an Asian Development Bank survey of trade finance providers.
Small exporters face a 41% rejection rate, nearly as high as the 40% faced by larger companies. Despite this, a group of FinTech startups is attempting to bridge the gap by offering faster and cheaper loans using AI-driven underwriting. Comfi, based in the UAE, raised $65 million in April to expand its services across the Middle East and North Africa.
The company pays suppliers within 24 hours of receiving an invoice while allowing customers up to 90 days to pay. Hokodo and Treyd are similar companies operating in different markets. Hokodo can approve a business buyer instantly, offering payment terms up to 90 days, while Treyd helps retail brands pay overseas suppliers upfront, giving the brand itself up to five months to repay.
Both companies analyze a business's invoices, payment history, and transaction data to make credit decisions, bypassing the traditional slow paperwork review of banks. The success of these companies hinges on their ability to accurately identify safe borrowers better than banks can. If they can do so, cheaper loan processing could open up trade financing to millions of small businesses currently excluded.
However, if they cannot, the risk of lending to riskier borrowers could lead to real losses during economic downturns, reminiscent of the caution banks exhibited towards small trade loans. Despite this uncertainty, 75% of small and medium businesses (SMBs) expressed their willingness to utilize at least one AI feature offered by their financial institution within the next two years, with the percentage rising to 83% among businesses generating over $1 million in annual revenue.
The demand for these tools is evident, but it remains to be seen if the underwriting behind them holds up when the economy turns.
Written by urgent.news from PYMNTS's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
