Smaller companies have a demand for trade and invoice financing, but their need to borrow lower volumes of cash makes them less attractive to many lenders. That’s why Vecron Lordstock Group says it launched an independent trade finance group.
“We have noticed that there is a great gap in the market when it comes to smaller trade transactions — up to US$2M per transaction,” said Jonathan Tseelon, CEO of the company’s new trade finance company, Vecron Exim, in a recent interview with Global Trade Review.
The publication highlighted the new company in reports Monday (Aug. 10), which will specialize in factoring, invoice finance and other forms of trade lending. While the unit also services large companies, it was this gap in small business invoice financing that led the company to launch this new unit.
In establishing operations, Tseelon told reporters that the company struck partnerships with financiers and other established experts in the industry. “Our company was established as a collaboration between financiers, executives from the supply chain management and manufacturing industries, as well as Silicon Valley venture capital, so we analyze risk differently,” he explained to GTR. “What we are looking for is transactions that make commercial sense and not necessarily financial sense.”
Tseelon elaborated: “Because we have people from many industries working within our company, we can pretty much understand any part of the supply chain and think flexibly on how to provide the capital to make the transaction work.”
Vecron is part of a growing number of alternative lenders using more than the traditional means to assess a potential borrower. While small businesses with a lack of credit history may find it difficult to access financing, other lenders are assessing other factors when determining who to finance.
A recent study conducted by the Consumer Financial Protection Bureau found that up to 45 million Americans do not stack up to the traditional definition of creditworthiness. But credit bureaus are beginning to use alternative data to assess these scores, and some lenders are following suit.
Tseelon added that the majority of Vecron’s clients are manufacturers and distributors — SMEs in the B2B supply chain — that are a key focus of the venture and have proven successful borrowers thus far, reports said.