The corona crisis increases demand for loan via Fintech platforms

The economic crisis generated by the new coronavirus pandemic has affected the entire variable income market and, although the real impact on the Brazilian economy is far from being totally predictable, the economic slowdown is already a reality. So far, the number of infected people with COVID-19 in Brazil has exceeded 9,000.

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There are a number of companies that, more than ever, need capital to seek balance at such a delicate moment. In this context, the Ulend peer to peer lending platform registered a 30% growth in demand for credit in March compared to February, with 610 requests compared to 457.

The volume of capital sought also showed growth. In March, the total amount requested was more than $18.7 million (R$98 million), compared to $14.3 million (R$75 million) in February, a growth of 33.5%. Moreover, comparing the first half of March (1 to 15) with the second (16 to 30), when the crisis worsened in Brazil, demand increased by 46% in the number of requests.

Companies with higher revenues now need to access capital quickly

The profile of companies seeking Ulend’s services also changed in this period. After the COVID-19 panic, there was an increase in demand for companies with higher revenues. The average revenue of companies requesting capital was $1.1 million (R$5.75 million), a figure that rose to $1.45 million (R$7.62 million) – which is a difference of 32.4%.

“Many micro and small companies need to access capital quickly and safely, which justifies this growth in demand at the head of the companies. In addition, the proportion of the crisis causes even the largest companies to capitalize in order to somehow maintain their financial management, which explains this search on the part of companies that earn more,” explained Ulend’s founding partner, Gabriel Nascimento.

Ulend to provide security for investors

If there’s a demand for capital at the head of the companies, the chaotic scenario of the economy has obviously left investors with one foot behind. However, according to Gabriel, the profile of products offered by Ulend has helped bring more security for investors.

“Although an experienced investor is taking a cautious position and observing the best market opportunities, at Ulend, more than 80% of the credit operations available on the platform have real guarantees, such as financial investments under the custody of Ulend or receivables. That is in addition to loans with real estate collateral, which minimize or eliminate losses in cases of default. And this is a good scenario in times of crisis,” he explained.

According to Gabriel, inside all the products with guarantee, a very solid alternative are those based on real estate.

“In the case of non-payment, a property will always be collateralized on debt, no matter the scenario that occurs. At Ulend, we only select properties that are worth 50%-70% more than the debt. This refers to houses, apartments, and land. So, it’s an alternative that harmonizes security with more attractive potential future profits,” he concluded.

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(Featured image by Lteixeira via Pixabay)

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First published in DIARIO DO COMERCIO, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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