Entrepreneurship has the potential to be one of the most critical contributors to South Africa’s economic growth. It has a pivotal role to play in supporting the country’s development through job creation, stimulating culture and innovation, and economic and social upliftment, according to a PWC report.
It adds that the private sector needs to actively support Small Medium Enterprises through active supply chain integration, procurement and monetary support via appropriate funding support vehicles.
Enter RainFin’s new Businessto-Retail product which makes it possible for corporates and established businesses to participate in the mega-trend of Crowd-Funding / Crowd-Lending.
Prior to this launch, the Credit Marketplace has been primarily used by small businesses seeking small (less the R750K) loans for working capital.
Now any size company can also benefit from raising larger capital amounts, outside of the conventional banking system i.e. directly from a previously untapped funding source: the retail market, institutional lenders, asset managers and even their existing customer and supplier bases.
Without the use of a Credit Marketplace, large businesses had no real cheap way of accessing retail and institutional lenders efficiently and quickly.
Once on the marketplace lenders are able to lend as little as R1000 or as much as R10 million to any borrower.
Established businesses will now, for the first time, also be able to access institutional funds, which have previously been reserved for corporates via the corporate bond market. Corporate and established businesses can apply for funding up to R100m.
“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,” said Andrew Whitty, RainFin: chief commercial officer.
A business’s community therefore benefits – by being given the opportunity to earn financial returns (fixed interest income and capital growth) that have previously only been accessible to institutional investors and high net worth individuals.
“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,” said Sean Emery, RainFin: CEO.