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.
If you want to find more about the Fintech sector in Brazil and the effects of the pandemic on the country’s economy, check out the Born2Invest mobile application. Our companion app is a fast and easy way to check the latest business headlines in the world.
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.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
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.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Why Disruptions Continue in the Cannabis Sector
Given its size, Canopy's results often provide an indication of the performance of the cannabis industry as a whole. Its...
Cost of Natural Gas Rises Globally, Says Acclaim Energy Mexico
The drop in natural gas production is partly the consequence of the cuts in oil production, given that a good...
Adofintech Celebrates Progress in Strengthening the Fintech Ecosystem
At the beginning of the year, Adofintech developed a work plan made up of four strategic guidelines: to promote the...
SeniorDomo Opens its Capital to Invergy B Side and Archipelago Next
91% of the capital will be used for marketing the company, while the remaining 9% will be used to improve...
REE Reflects on ESG Recovery at its 2021 Sustainability Workshops
The Red Electrica Group is initiating a new line of action in four major critical areas. The first is the...
Cannabis2 weeks ago
ArgenCann Will Be Part of Expo Cannabis 2021
Business2 weeks ago
Augmented Reality Investment Is Heating Up: Magic Leap, XRApplied
Cannabis2 weeks ago
Mexican Senators Say Cannabis Legalization Would Generate Employment and Will Put a Strain on Drug Trafficking
Featured2 weeks ago
E-mobility Startup Aviloo Achieves Record Crowdfunding on Green Rocket