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In the last few months, we’ve seen an explosion in funding for consumer banking startups in Latin America, all eager to reinvent traditional banking in the region. However, the business banking space seems like it’s also undergoing some changes.

Today, Chile-based Kredito announced a $4 million pre-seed round. The company focuses on generating loans for small to medium-sized businesses (SMBs). 

“What we see is that in our sector people have a bank account but don’t have access to credit,” said Sebastian Robles, co-founder and CEO of Kredito.

Robles explained that in Chile, when you open a business bank account, you don’t get a credit or debit card attached to it, so entrepreneurs usually have to use their personal cards.

“Ninety percent of our customers don’t have access to credit with their bank (but they have a bank account) and thanks to the power of AI they can have access to working capital for the first time,” added Robles.

By using an AI algorithm to underwrite the loans in real time, Kredito does all the heavy lifting and then connects the SMBs with a traditional bank that loans out the money.

“We use proprietary algorithms and alternative data to evaluate credit risk more inclusively than traditional banks,” the company said in a statement. This approach speeds up the process of getting a loan, which traditionally has taken weeks or months to complete.

While in beta, the company used data from more than 10,000 SMBs to train their AI models.

Kredito makes money by serving as lead generation for the traditional banks and charging them a small percentage for each loan they bring in.

In addition to its loan service, Kredito is also developing a debit card product that will be available in the next couple of months. Like other fintechs in the region, the company’s strategy is to launch individual financial products one at a time without having to apply to be a full bank.

“Being a bank is too expensive, so we use pieces of the ecosystem instead,” Robles told TC.

Kredito launched in March of this year and today the company has more than 2,000 active SMBs on the platform. 

In addition to offering new products, the company is very focused on offering optimal customer service, which is an area that traditional banks are lacking.  

“To open a bank account for our startup was more painful than raising our angel funds, and despite having $4 million in the bank, I still don’t have a line of credit for Kredito,” Robles said.

Investors in the round include a private VC fund from Maurice Khamis and Family, Link Capital Partners, partners from Patio Group, Karim Fajardin and other family offices focused on VC and fintech.