The 5 trends transforming SMB financing in Latin America
Discover 5 fintech trends reshaping SME financing in LATAM, from embedded finance to data-driven lending and policy innovation.
Small and medium-sized businesses (SMBs) are the backbone of Latin America's economy. They generate over 60% of employment and contribute significantly to GDP across the region. Yet, the paradox persists: these businesses are critically underserved by traditional financial institutions. In 2025, amid technological innovation and a changing economic landscape, five major trends are reshaping SMB financing in Latin America.
This transformation is driven by necessity. From supply chain instability to rising inflation and the digitization of commerce, SMBs need smarter, faster, and more flexible financial solutions. According to the OECD, nearly half of SMBs in the region report difficulty accessing formal credit, and approximately 88% of firms are classified as microenterprises. The resulting financing gap demands targeted innovation, stronger partnerships— like R2—, and better use of technology and data.
Here are the five trends that are making that possible:
Embedded lending: enabling credit where it’s needed the most
Embedded lending is redefining how SMBs access capital. By integrating financial services directly into non-financial platforms, companies can now offer credit, or other services, white-labeled: within the very platforms SMBs or professionals already use on a daily basis. This digital and frictionless model removes the barriers of traditional banking and tailors financing to the real-time performance of businesses.
Embedded finance may allow higher approval rates via a seamless integration of financial services into everyday software and digital experiences. For example, a logistics software platform that enables a local distributor to access working capital loans based on delivery data is a practical case.
Why does it matter in LatAm?
Many SMBs operate outside the formal banking system.
Embedded solutions use real-time, granular data instead of legacy credit scores.
Platforms become operating systems rather than just service providers.
This model enhances financial inclusion and supports digital-based lending in LatAm by assessing creditworthiness based on transaction flows, not paperwork.
Data-driven lending: unlocking smart and fast capital
In the past, lending decisions were based on outdated documentation, static credit reports, or collateral demands. Today, lenders use alternative data from e-commerce platforms, payment processors, point-of-sale systems, and micro-analysis using machine learning to evaluate risk.
This trend directly addresses the financial problems in digital SMBs:
Many businesses lack formal documentation.
Traditional credit scoring misses fast-growing, digital-first companies.
Real-time data allows for dynamic and up-to-date credit models.
Fintechs are leveraging AI and machine learning to offer personalized credit terms, flexible repayment schedules, and pre-approved offers—all based on actual business activity. This is transforming underwriting and reducing default rates while increasing loan accessibility.
According to Helmi Group’s latest insights, fintech lenders using transactional data can approve up to 60% more SMB loans than traditional banks, with significantly faster turnaround times.
Rise of sector-specific financing platforms
One size doesn’t fit all in SMB financing. That's why specialized platforms are emerging to serve vertical markets: retail, agriculture, logistics, mobility, and more. These platforms understand the work flows, seasonality, and risks specific to each industry.
In Latin America:
Retail platforms offer inventory financing tied to real-time sales data.
Agrotech lenders provide loans based on crop cycles and satellite imagery.
Food delivery and mobility platforms provide cash-advance, embedded wallets and instant payouts to microentrepreneurs and small businesses.
This is particularly useful in a region with complex financing challenges in LatAm, such as informality, economic volatility, and fragmented infrastructure.
According to the OECD's 2024 SMB Policy Index, the majority of businesses in LAC are microenterprises, and nearly 50% operate informally—creating unique credit and risk profiles that require contextual solutions.
Tailored financing leads to better product-market fit, lower risk, and greater adoption.
Strategic fintech partnerships: bridging the access gap
Traditional banks are often too slow or risk-averse to serve SMBs. But rather than compete directly, many fintechs are now partnering with established institutions or digital platforms to scale their reach.
These partnerships are a cornerstone of fintech trends 2025, where collaboration beats competition. Examples include:
APIs that allow banks to integrate with gig economy platforms.
Fintechs powering lending products for digital marketplaces.
White-label solutions that embed credit into retail management software.
Such partnerships allow fintechs to focus on product innovation, while banks provide regulatory infrastructure and funding. The result: SMBs gain access to sophisticated financial tools without needing to interface with legacy systems.
For the millions of businesses that fall into the credit blind spot, these partnerships are not optional—they're essential.
Innovation through public policy & financial regulation
Regulatory bodies across LatAm are beginning to recognize the value of SMB-focused innovation. From sandbox programs to open banking frameworks, governments are building environments where digital finance can scale responsibly.
Mexico’s Fintech Law, which sets the foundation for digital financial services.
Brazil’s open banking initiative, enabling data portability and competition.
Chile and Colombia’s fintech registries and innovation hubs.
Additionally, the 2024 SMB Policy Index by OECD/CAF/SELA emphasizes that LAC governments should prioritize diversified financial sources, targeted SMB education, and alignment of financial inclusion policies with the digital transformation of small businesses. It also highlights that over 60% of SMBs still face barriers to accessing formal credit, despite representing 99.5% of the region’s business fabric.
Public-private collaboration is paving the way for scalable and compliant digital finance ecosystems, where SMBs can access capital without compromising security or compliance.
Conclusion: a new Era for SMB finance in LATAM
The landscape of SMB financing in Latin America is undergoing a historic transformation. From embedded finance and AI-driven underwriting to industry-specific lending and collaborative fintech models, the future is inclusive, fast, and tailored.
These 5 trends are not isolated—they’re interconnected. Together, they respond to long-standing financing challenges in LatAm and unlock real solutions for the financial problems in digital SMBs.
For digital platforms, investors, and policymakers, the opportunity is clear: build solutions around the realities of SMBs, not around the limitations of the traditional system.
And for SMBs themselves, the message is even clearer: your financial future no longer depends solely on banks. It lies within the platforms, tools, and partnerships that are transforming Latin America's fintech landscape.
Wondering how this could help your platform grow faster?
R2 enables platforms in Latin America to offer embedded loans to their merchants—under their own brand… without using their own capital nor taking on risk. We handle the credit, compliance, and operations so our partners can boost growth, increase retention, and unlock new revenue streams in weeks.
Discover how we can work together, email us at partners@r2.com.
Sources:
IEBS. “¿Qué es Embedded Finance o Finanzas Integradas?”Helmi Group. “Fintech in Latin America: Trends and Opportunities 2023 Q4”OECD, CAF, SELA. “SME Policy Index: Latin America and the Caribbean 2024”World Economic Forum. “Embedded Finance: A Disruptive Force for Financial Institutions”ETA Events. “Latin America’s Fintech Revolution: Top 10 Trends Shaping the Future of Payments in 2025”América Digital.“Why Mexico Will Become the Next Fintech Capital of Latin America”