The untapped SME credit opportunity in LAC

Small and medium-sized enterprises (SMEs) are the engine of Latin America's economy, accounting for 98% of businesses and 60% of employment across the region.¹ Yet despite their economic importance, many SMEs remain underserved by traditional lending models, limiting their ability to invest, expand and contribute fully to economic growth. 

The opportunity for lenders has never been greater. As SMEs increasingly embrace digital commerce, 78% report that digital payments have improved their access to financing, creating new data signals that can be leveraged to assess creditworthiness more effectively.¹

However, traditional underwriting approaches often rely on limited financial histories, static statements, and sparse credit bureau data leaving many viable businesses overlooked. Mastercard's Small Business Credit Analytics (SBCA) bridges this gap by complementing conventional credit assessment with consented, transaction-based insights, enabling lenders to better evaluate cash-flow stability, business performance and repayment capacity. The result is smarter credit decisions, expanded lending opportunities and greater financial inclusion for the SMEs powering the region's growth.

Traditional underwriting relies on financial statements, collateral and credit history which are often unavailable for SMEs. This creates a visibility gap between actual business performance and perceived risk making it difficult for lenders to assess creditworthiness with confidence.

58% of global lenders (incl. LAC) say less than half of thin-file or underserved SMB applications are approved.²

Key factors contributing to the visibility gap

This results in a cycle of financial exclusion and constrained growth. Without credit, they can't invest, digitize or expand; without growth, they remain small, informal and "invisible" to banks.

Increasingly, lenders are exploring how alternative data sources such as transaction-based insights can complement traditional credit assessment.

Solutions such as Mastercard’s Small Business Credit Analytics (SBCA) generate aggregated business metrics derived from anonymized transaction data, helping provide a more dynamic view of business performance. This allows lenders to incorporate observable activity, such as sales trends and transaction patterns, alongside existing data sources.

By incorporating additional insights, lenders can build a more complete and current understanding of SME performance. This can support:

• Faster and more consistent decision-making
• Better alignment between risk and pricing
• Increased approval rates for creditworthy but underserved businesses
• Improved portfolio monitoring and early warning signals

In environments where traditional data is limited, these additional insights can help reduce uncertainty and support more confident lending decisions, enabling more SMEs the access to the capital they need to grow.

Across markets, lenders and embedded-finance platforms are exploring how transaction intelligence can strengthen the SME lending experience. The two anonymized examples below illustrate how SBCA can complement, not replace, established credit workflows.

Small businesses play an important role in Brazil's economy, creating a need for lenders and financial institutions to balance growth opportunities with effective risk management. One of Brazil's leading acquirers faced this challenge as it looked to strengthen its small business credit portfolio following a period of elevated losses.

The company partnered with Mastercard to integrate Small Business Credit Analytics (SBCA), using consented transaction-based insights to support credit decisioning and portfolio management. These insights gave the acquirer a more complete view of merchant performance and risk, increasing the merchant match rate to 96%.

The solution saw rapid organization-wide adoption, delivering more than 2 million successful consultations and generating approximately $365,000 in revenue within its first four months and helping support more informed lending decisions, stronger portfolio oversight, and continued business growth.

Access to timely business performance data is increasingly important for lenders seeking to support small businesses while managing portfolio risk. A North American digital SME lender incorporated Mastercard's Small Business Credit Analytics (SBCA) solution into its underwriting and portfolio management processes to enhance visibility into borrower performance.

Using transaction-based business insights, the lender was able to identify changes in business-performance indicators that may be associated with emerging challenges.

This helped inform earlier risk-management and customer-support activities.

By incorporating these additional signals into its risk management approach, the lender strengthened its ability to monitor portfolio health and make more informed lending decisions, helping create a more proactive and supportive borrower experience.

The SME credit gap in LAC is not simply a question of access to capital. It is a question of access to reliable, timely information. Despite strong economic activity across the SME segment, limited visibility continues to constrain lending and growth.

Expanding access to finance represents both a development priority and a significant commercial opportunity. Institutions that combine traditional data with additional sources of business insight will be better positioned to assess risk, support responsible lending and grow sustainably.

Transaction-based insights are emerging as a valuable addition to the credit assessment toolkit. When used responsibly and alongside established underwriting practices, they can support more informed decisions and help expand access to credit for underserved SMEs