Founded in 2014 by Dr. Jens Woloszczak, newcomer Spotcap is the latest new entrant, providing alternative finance for small and medium-sized businesses. It’s headquarters are located in Berlin and it has offices in Madrid, Amsterdam, Sydney and the UK. It’s backed by Rocket Internet, one of the world’s largest venture capital firms and startup business incubators. The multinational online credit platform, provides short term loans, aiming to save customers time and money when searching for financing options.
A key feature of the newcomer’s service is that it lends to businesses through a single product, which is a combination of a line of credit and a business loan. “When a business decides to draw from their line of credit, the product becomes a standard business loan,” the company says.
The true cost of securing a loan
According to a recent survey by the Federal Reserve Bank of New York, business owners spend approximately 25 hours on the search for credit. Therefore, the true cost of securing a loan includes the time an entrepreneur loses trying to find it. Delays can result in missed opportunities and the loss of competitive advantages. Traditional bank loans can involve a decision process that takes up to several weeks. Small business owners declare access to capital is their top growth concern. Research from Harvard Business School shows that whilst large business lending is rising, small business lending continues to fall.
Spotcap’s unique algorithm
Spotcap’s founders say that its use of technology differentiates it from other lenders, crediting its use of a unique credit algorithm:
That allows it to make a quick, yet rigorous assessments of an SME’s financial condition. This gives it deep insight into the financial condition of the SME business based on basic information and documents that SMEs upload during the online application process.
Once an application is complete, Spotcap promises, the approval process usually takes no more than one working day.
Spotcap uses a unique, proprietary credit scoring technology that directly evaluates real-life business data to provide fast and flexible financing.
UK new target territory
Already established as a lender to SMEs in Australia, Spain and the Netherlands, the UK is new territory for the company to explore, offering credit lines of as much as £150k. In Australia Spotcap lends amounts up to $250,000, in the Netherlands €250,000, and in Spain €100,000.
Credit line facility ensures greater flexibility
The credit line establishes the maximum amount of money a business is eligible to borrow. In the UK this cap is £150K for direct borrowers. The advantage of a credit line over a traditional loan is that a business can withdraw under its credit line flexibly. The business chooses when and how much they need and only pay for what they use. Every repayment tops up the available credit line amount.
Spotcap understands Britain is open for business,” said Niels Turfboer, Managing Director Benelux & UK. “We believe that the underlying economic dynamics of the UK economy are unchanged and that SMEs will need capital to make the most of opportunity in turbulent post-Brexit times. We look forward to working with them to maintain Britain’s strong entrepreneurial and creative prowess.