Crowdfunding lending platforms a ray of hope for Italian SMEs

The COVID-19 emergency in Italy has brought small and medium enterprises, which constitute the socio-economic fabric of the country and which are suffering from the liquidity crisis, to their knees.

With activity blocked for almost two months, there has been a shower of reports of small and medium-sized entrepreneurs with employees laid off but who have not yet seen a euro. Economic aid is planned, on paper, but many people fear that the disbursement of the loan will reach the Greek calends.

However, what perhaps not everyone knows is that companies that need financing do not have to go to the banks. The Fintech sector, in the guise of lending crowdfunding, is in fact meeting the needs of small and medium-sized companies that need loans with two key characteristics: flexibility and innovation.

Discover how small and medium companies in Italy can now access loans via P2P lending platforms to survive the liquidity crisis. Read the latest financial news from around the world with the Born2Invest mobile app.

Direct corporate lending: the alternative solution to banks

By eliminating the intermediary – the bank – companies applying for the loan can gain an advantage in terms of speed and streamlined procedure. In addition, lenders generally get a higher return than other types of investment.

Crowdfunding lending platforms, which are responsible for matching supply and demand, work to ensure that all parties involved are protected: by helping companies preserve and protect their liquidity, they also defend the interests of lenders.

Crowdfunding lending helps enterprises

The first Italian P2P lending BorsadelCredito.it marketplace launched Cash Anti COVID-19. That is a funding to support SMEs in a liquidity crisis due to the coronavirus emergency. The platform will provide a 6-month loan to cover the company’s expenses which can be repaid starting from the end of the 6th month.

The pan-European business financing platform October, on the other hand, had already announced in mid-March the freezing of capital repayments for 3 months and the stop of monthly commission charges to client companies. To these has now been added another possibility. Italian companies eligible (based on turnover and the sector in which they operate) for a public or private guarantee can repay the current October loan and obtain a new loan for a higher amount than the current outstanding capital and for a longer duration.

For companies, this refinancing operation means increased liquidity and longer-term financing. The benefit for private lenders is the immediate repayment of the outstanding capital, while for institutional lenders it is an effective way to secure part of the capital during the crisis.

Re-Lender has also intervened in support of companies in difficulty, launching the RE-Start Italia soft loans line. The real novelty is that with this initiative the portal, which so far has only financed conversion projects in the industrial, real estate, and ecological sectors, opens the doors to other types of companies. Therefore, companies operating in any sector will be able to apply for financing. “We will not rely on the project itself but on the company’s ability to repay the loan,” they explained. “We will also be able to finance smaller amounts, our average cut to date is $323,000 (€300,000).”

The platform has also decided to reduce the collection fees that are paid by the applicant companies. While the fees paid so far were on average 7-8%, they now rise to around 5% of the collection.

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(Featured image by Angela_Yuriko_Smith via Pixabay)

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

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