Closing Europe’s SME finance gap with better data

Europe’s small and medium-sized enterprises are not short of ambition, they are short of finance. Despite being the backbone of the European economy, SMEs remain the businesses most likely to be turned away by lenders, not because they are poor credit risks, but because the data used to assess them rarely tells the full story.

A gap that persists despite demand

SMEs rely on leasing more than almost any other form of external finance and leasing lessees invest significantly more in their businesses than those that do not use it. Leasing is, by Leaseurope’s own data, the most preferred financing option among SMEs, with more than half viewing it as relevant to their needs.

And yet the gap persists and it is vast. Globally, the World Bank estimates that MSMEs face $5.2 trillion in unmet finance needs, 50% more than the entire current lending market for such businesses. Within Europe specifically, McKinsey’s Finalta benchmarking shows that top-performing banks in Western Europe generate twice as much revenue per active SME customer as the weakest performers, and nearly four times as much revenue per risk-weighted asset, a gap driven less by the SMEs themselves than by how well lenders actually understand them.

The European Central Bank’s latest Survey on the Access to Finance of Enterprises, covering the second quarter of 2026, found that financing conditions for firms are tightening further, driven primarily by SMEs facing rising borrowing costs and limited access to funding.

A finance gap that is really a data gap

The uncomfortable truth is that this gap is not, in most cases, a genuine reflection of SME risk. In a May 2026 response to the European Banking Authority, Leaseurope argued that current capital rules significantly overstate the risk of SME leasing, with regulatory capital requirements running far above the actual losses lenders experience. Lenders and regulators alike are often working from an incomplete picture. The finance gap is, to a meaningful degree, a data gap.

This is where better data, used well, can change the equation.

What better data actually looks like

For decades, SME credit decisions have leaned heavily on a narrow set of traditional indicators: financial statements, credit history and collateral. These are useful, but they tell only part of the story, particularly for younger, fast-growing or asset-light businesses that do not yet have a long track record on paper.

A 2026 industry study into SMB credit decisioning found that alternative data is already having a measurable impact, with 45% of lenders reporting it has a major effect on approving applicants with limited traditional credit history and 47% saying it enables faster decisions overall. The same research found that alternative data use is highest at the point of origination, exactly where a thin credit file is most likely to turn a viable SME away.

For the leasing industry specifically, the richest source of better data is often sitting in plain sight: the asset itself. Connected equipment and vehicles can provide a continuous picture of utilisation, condition and performance, data that speaks directly to how a business is actually operating, not just how its balance sheet looked at the last financial year end. Combined with transactional and behavioural data, this gives lessors a far more current and complete view of an SME’s creditworthiness than static financial statements alone can offer.

In practice, connected asset data may include vehicle or equipment telematics, operating hours, mileage, load cycles, maintenance alerts and sensor data that identifies wear before failure. More broadly, alternative data draws on the transactional and behavioural trail a business already creates: open-banking feeds that reveal cash-flow patterns, e-invoicing and accounting records, payment-processor data, and utility or trade-payment histories. These sources are neither exotic nor new. The challenge is that most lenders lack a consistent way to incorporate them into credit decisions.

Are lenders’ systems ready to use this data? In most cases, not yet. Core lending platforms were designed for structured, periodic submissions, such as quarterly statements and annual returns, not continuous, high-frequency streams in varied formats from telematics providers, accounting platforms and payment processors. Using connected and alternative data effectively requires infrastructure that can ingest and standardise it, then deliver actionable insights directly into underwriting rather than merely display them on a dashboard after the fact.

Discipline, not just data

None of this means abandoning discipline. If anything, better data demands more of it. Lenders must still retain clear accountability for credit decisions, with defined controls and human oversight built around any automated or AI-assisted process. The objective is not to remove judgement from lending, but to give that judgement a fuller, more current and more accurate set of facts to work from, so that SMEs who are genuinely creditworthy are not turned away simply because the available data could not see them clearly.

A foundation for better policy, too

For policymakers, the implication is just as important. If implicit risk weights on SME leasing are indeed overstated, better data is not only a tool for individual lenders. It is a foundation for fairer regulatory treatment of SME finance across Europe, one that could unlock meaningfully more capital for the businesses that need it most.

Closing the gap

Europe does not have a shortage of SMEs worth financing. It has a shortage of visibility into which ones are ready and that is a problem data can solve. At NETSOL, our technology is built around this principle, bringing origination, servicing and connected asset data together on a single system, so that lessors can make faster, better-informed decisions without losing the oversight SME lending demands. Closing the finance gap will not happen through better intentions alone. It will happen through better data, used with purpose.