Fintech lenders and business groups are calling for changes to financial regulation and investment structures to attract more institutional capital into small-business lending, arguing that current risk assessments make many loans uneconomical even when repayment records suggest lower losses.
John Denton, secretary-general of the International Chamber of Commerce (ICC), said data from the ICC Trade Register showed a default rate of 0.24% in the trade finance activity covered by its records. He argued that the way financial rules weigh the risk of such lending can still make it uneconomical for institutions to serve smaller businesses.
The comments came during a panel on the World Bank Group’s micro, small and medium-sized enterprise strategy at the 2026 World Bank Group and International Monetary Fund (IMF) Annual Meetings.
Denton said policymakers need to reconsider the frameworks governing the financing of small businesses if lenders are to expand credit at scale. Although digital data can help institutions evaluate borrowers, he argued that improved information will not be enough if regulatory capital requirements continue to discourage lending.
Chris Wehbe, chief executive officer of British fintech Lendable, said institutional investors often struggle to classify loans originated by fintech companies in emerging markets. The combination of small-business lending, fintech business models and emerging-market exposure creates what he described as a “triple niche” for investors.
To attract larger pools of capital, Wehbe said lenders need reliable data, consistent metrics and independently verifiable cash flows. Investors must be able to reconcile reported performance with actual movements of money, rather than rely on information that cannot be compared across institutions.
He also argued that investment structures should separate the risk of loan assets from the financial condition of the fintech company that originated them. Securitisation, bankruptcy-remote structures, controlled collection accounts and backup servicing arrangements could help make these assets more familiar to institutional investors.
Scale is equally important, he said. Small, isolated financing arrangements are unlikely to attract the volume of capital needed to turn fintech-originated small-business loans into a mainstream investment category.
Blended finance and first-loss facilities, in which development institutions or other parties absorb an initial portion of losses, can help reduce risks for private investors. Wehbe said such mechanisms need to evolve into larger investment vehicles that can initially draw on government and development finance support before attracting more private capital.
David Arana, chief executive officer of Mexican fintech Konfío, identified three elements needed to expand lending: funding, access to data and regulation. Fintech companies can improve credit assessment and distribution, he said, but broader growth requires stable financing sources and rules that allow innovative lending models to operate alongside established financial institutions.
The cost of capital also remains a concern for cross-border investors. Wehbe said lending structures confined to individual countries can face constraints linked to sovereign credit ratings, limiting the extent to which diversified portfolios can reduce financing costs.
He argued that combining assets across markets through structures such as securitisation could help investors diversify risk and expand the amount of capital available for small-business lending.
Kell Jay Lim, Grab’s head of financial services, said risk-sharing arrangements and partial guarantees from development institutions can help fintechs reach more businesses. He cited support from the International Finance Corporation for Grab’s digital bank in Malaysia, which he said could help the business reach an additional 10,000 businesses.
The panel also highlighted the need to improve the comparability of loan performance data. Wehbe said Lendable’s database contains almost 250 million individual loans globally, with track records extending beyond 10 years, and that observed loss rates were consistently lower than the applicable risk weightings would suggest.
For the World Bank Group and other development finance institutions, the challenge is to use guarantees, blended finance and better data to reduce barriers to private investment without undermining financial stability.
The panel called for expanding access to small-business credit will require more than new digital lending platforms. It will also depend on investment structures and regulatory frameworks that allow verified loan performance to translate into financing at scale.
