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Fintech startup, RainFin has added crowdfunding and lending options to its platform in the form of Business-to-Retail loans. Amounts of up to R10-million will be handled through the service.
This new offering will allow companies of varying sizes to borrow from a range of sectors, such as the retail market, asset managers, institutional lenders, and even their existing customer and supplier bases.
“The Business-to-Retail product leverages RainFin’s technology to significantly reduce the cost burden associated with traditional loan origination, which in effect enables alternative capital providers and individuals to price loans based on the true economic cost of lending,” says the chief commercial officer of RainFin, Andrew Whitty, in a press release.
Loans can be listed on RainFin’s Credit Marketplace that are either “fully asset-backed or rated businesses with significant trading history and assets”. Lenders can then lend up to R10-million to any borrower, which RainFin will consolidate into one loan.
“Personally we wanted a product that could earn you and I, as individuals, the same types of returns normally only reserved for the big institutions on large debt transactions. The math is simple: individuals give their money to banks as deposits for returns between 7% and 8%; banks lend that money to large corporates at nearly a 50% markup. We want to give individuals the ability to earn the markup themselves by participating directly in these large loans,” adds RainFin’s CEO, Sean Emery.
Businesses are also able to earn financial returns, such as fixed interest and capital growth, which were otherwise previously only available to high net worth individuals and institutional investors.