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The habitual selection of SME funding in an increasingly diverse market

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Over the past 10 years, different types of financing have become available in the Netherlands. It is now possible to combine bank loans, crowdfunding loans and risk capital. Moreover, fintech applications lower the threshold for applications and reduce response times from weeks to just days or even hours. Fraser, Bhaumik and Wright (2015) point out there is a lack of knowledge of the cognitive process involved in selecting SME financing. This paper looks into the selection process financial advisers use, against the backdrop of the growing range of funding possibilities. To assess this process, we try to understand dominant habits and related heuristics. Within our explorative study, 19 experienced and independent SME financial advisers were interviewed. The questions address their knowledge, skills, experiences and choices in the selection process on the financing or refinancing of working capital and growth. Taking a grounded theoretical approach, we use Atlas TI to label all answers and statements step by step. The findings suggest a strong bias of decision-making towards the more traditional banking products. Yet advisers state they are aware of, and familiar with, other solutions. We have also found that fintech solutions are hardly used to prepare financing solutions up front. Financial advisers estimate the likelihood of acceptance by a few financial providers they know well within their personal network. We suggest that there is a behavioural approach to financing in the day-to-day decisions made by financial advisers. As long as automated selections are not fully transparent and are unable to combine all types of financing up front, financial advisers will be guided by habit or by availability, confirmation and affect heuristics, rather than looking for new financing solutions and combinations.


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