U.K. payments processor Worldpay is coming onto the small business financing stage with a bit of help from small business cash advance firm Liberis.
In an announcement made Friday (Dec. 4), the company revealed the launch of Worldpay Business Finance, which sees the payments company providing unsecured financing for SMEs. The funding, Worldpay said, will be issued based on a company’s forecasted credit and debit card sales.
[bctt tweet=”Worldpay funding will be issued based on a company’s forecasted card sales.”]
Repayment is also based on these transactions, with a business providing a pre-negotiated percentage of its card transactions as loan repayments. This system allows businesses to repay only when they have the money to do so and without fear of nonpayment fines.
The process is similar to that of U.S. payments processor Square, which uses transaction data of a small business customer to underwrite loans to that company.
“We’ve been concerned that the lack of affordable funding available to Britain’s SMEs is stopping great businesses from growing and thriving,” stated Worldpay U.K. Managing Director Dave Hobday. “Unlike traditional loans, the flexibility of Worldpay Business Finance means that payments can be structured in a way that better suits the models of small businesses.”
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He added that the company’s current relationships with about 280,000 small businesses mean Worldpay will be able to mitigate risk more effectively, working with familiar companies that already provide Worldpay with key data about sales and cash flow.
In a separate statement, Liberis U.K. Managing Director Rob Straathof said the partnership is an effort of financial inclusion for SMEs in the country.
“We understand how hard small businesses work and how important a fairly priced and flexible credit solution is to help companies grow,” Straathof said. “Our flexible payment system means repayments are relative to income, and there are no hidden fees or charges.”
According to the companies, the tool is only available to existing Worldpay customers, who will be able to apply for a cash advance worth up to one month’s worth of card transactions obtained by the business.
