The artificial intelligence (AI) platform aims to provide lenders with improved efficiency and an expanded range of financial products

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When a small or medium-sized business (SMB) approaches their bank with a loan request, there is only a 20% chance that they will qualify for full financing. Many of these companies then turn to private lenders and merchant cash advance (MCA) providers and borrow at potentially double-digit annual percentage rates (APRs).

On the lender side, fintech players also face the challenge of extending credit to their customers. These companies currently have to develop their own models, processes and technologies. Llama AIwhich launched earlier this year, hopes to change that with its AI-powered platform, which will allow its partners to quickly onboard clients while offering a range of financial products while also targeting risk levels.

According to Lama AI, fintech partners can avoid building their own lending infrastructure, models and secure lending facilities while benefiting from higher approval ratings. Aside from being a long and costly process, Lama AI says that building a credit product in-house also limits the types of credit that can be offered and the user base that can be served.

“Eight out of ten small businesses seeking capital for growth, working capital, hiring, seasonality or other reasons are in many cases turned down by their main bank despite being a loyal customer for many years,” said Omri Yacubovich, co-founder and chief executive officer at Lama AI.

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“The borrowing processes required by traditional financial institutions are not only lengthy and demanding,” Yacubovich said, “…the industry as a whole is struggling to assess small business risk. We are arming our banking partners with superior digital operations and streamlined processes to ensure accurate underwriting data and insights, and meaningful expansion of their current credit box and product offerings.”

How Llama AI works

Lama AI, which recently announced a $9 million seed investment, leverages first-party, third-party and open web data opportunities to provide better data and onboarding. The platform reduces paperwork and application time without compromising the data needed for complete and accurate underwriting, the company said. Using the resulting dataset, Lama AI then automatically associates the lending opportunity with the best match in the network based on each partner’s preferences.

For example, a banking partner may see customer demand for invoice factoring, which may be a credit product that the bank does not currently offer.

“Previously, customers would go to another institution for this product, which undermined the customer’s relationship with their main bank,” Yacubovich told VentureBeat. “With Lama AI, the bank can easily launch any loan product in a matter of days with no balance sheet risk and even keep loan administration in-house.”

The bank can also adjust the offer, e.g. B. Limit offers to 10% APR or exclude lenders within 100 miles of their own branches.

In another case, Yacubovich said, say a bank has a risk policy that limits its ability to lend to companies that have been in business for less than two years (a common limitation). An individual who owns several profitable businesses is looking for capital to expand their new, year-old trucking operation. Instead of refusing that loan request (and risking the entire business relationship), with Lama AI, the bank can offer its customer a loan at bank rates by outsourcing the credit risk to a partner bank with a suitable appetite.

“Data already available from Lama’s beta banking partners shows an average 300% increase in bank deal flow acceptance rate while cutting the onboarding process from months to days,” said Yacubovich.

performance in the real world

Some additional features on Lama AI’s roadmap include portfolio analysis and automatic appetite adjustment based on the lender’s current portfolio, as well as correlation to global macro changes.

Today’s funding round was co-led by Viola Ventures and Hetz Ventures and includes Foundation Capital and SixThirty.

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