Unconventional Financing Methods Threatening Small-Medium Enterprises' Existence?
Liberis Expands Revenue-Based Financing in Germany
Liberis, a specialist in embedded finance, has recently partnered with Fincompare, the largest small business broker marketplace in Germany, to offer revenue-based financing to SMEs in the country [4]. This move aims to improve access to alternative financing options for small and medium-sized businesses who might face challenges securing conventional credit.
Since starting operations in Germany last year with Nexi, Liberis has secured financing for over 120,000 SMEs [1]. The company does not use Open Banking data for creditworthiness assessment but relies on anonymized transaction history provided by partners. This approach allows businesses to receive automated pre-approval up to an individually calculated amount [2].
Revenue-based financing, which charges repayments as a percentage of revenue rather than fixed installments, can help SMEs manage cash flow variability better and potentially reduce default risk. However, specific evidence regarding Liberis’s performance or impact in Germany is not readily available [3].
Despite the potential benefits, the market for SME financing in Germany remains challenging. A KfW study indicates that banks are becoming more restrictive in lending to SMEs [5]. Service providers and construction companies are particularly affected by the decline in SME loan applications [6].
Liberis offers financing from €2,800 to €500,000, with most customers choosing a repayment rate of typically 10-20% of revenue [2]. The money is usually with customers within eight hours, and always within 48 hours, barring any delays on the customer's side or additional evidence required [1].
Hanna Sommer, Managing Director at Liberis, has stated that they have not had a single payment default in Germany since starting operations [1]. She also mentioned that 60 percent of customers have already applied for follow-up financing [6].
Liberis has also partnered with eBay to provide sellers on the marketplace access to revenue-based financing [7]. Sommer plans to continue expanding the business and announce further partnerships in the DACH region in the near future [4].
Lukas Homrich, a freelance journalist and a member of the dreimaldrei journalists' bureau, writes about economic and financial topics. His recent article discusses the challenges facing SMEs in securing loans in Germany [5].
In conclusion, while the effectiveness of Liberis’s revenue-based financing in Germany in terms of loan defaults or the breadth of SME financing access is not detailed in the available search results, the partnership with Fincompare represents a significant step towards improving access to alternative financing options for SMEs in Germany.
- As Liberis expands their revenue-based financing in Germany, they might attract more technology-driven businesses that are interested in innovative financing options.
- The growing partnerships of Liberis, such as the one with eBay, shed light on their interest in integrating their financing solutions with various business sectors, especially those that leverage technology.
