PYMNTS-MonitorEdge-May-2024

Capify Sets A New Precedent For Alternative Lending

If you hadn’t heard the Capify name before this week, it’s likely because it wasn’t technically a company yet. But with the news that four small business alternative lenders operating in four different nations all joined under the Capify name, you surely know the brand now.

Capify was once four separate small business lenders, all sharing resources and a technology platform, and all offering 60-second decision for small business borrowers. The plan to merge these four companies – U.S.-based AmeriMerchant, U.K.-based United Kapital, Australia-based AUSvance and Canada-based True North Capital – has been part of founder David Goldin’s plans for years, he told PYMNTS.

A time ago, when the alternative lending market wasn’t as advanced as it is today, Goldin said that the secret was kept to avoid competitors entering these other markets, too. But the current market climate, with highly competitive industries in all four countries, meant that the official launch of Capify couldn’t wait any longer.

“We’ve seen more competition overseas in the U.K., Australia and Canada in the last 12 months than we’ve seen in the last five years,” Goldin said.

So, it’s nothing new that alternative lending exists in these markets. But according to Capify, they are the first-ever alternative lender to single-handedly operate in all four nations. Not only that, but Goldin also said that they are the only “responsible” lender to operate in markets like Australia and Canada, where alternative finance newcomers are beginning to emerge.

“None of these companies have been around long enough to have the underwriting credit performance data to really know what a business can and cannot afford to repay,” the executive told PYMNTS, adding that as a balance sheet lender, Capify has been around long enough, and can run the stress tests, and has seen the up and down credit cycles all necessary to reduce investment risk.

This is a far cry, he said, from the flurry of alternative lending platforms that have launched across these countries in just the last few months. “They’re very dangerous for investors because the platform itself takes no risk,” Goldin explained, adding that many of these players haven’t been through an entire credit cycle to be able to adequately mitigate risk for their lenders.

As a balance sheet lender that has been operating in the market for several years, Capify has the industry experience and data capabilities to manage the risk associated with small business lending. And now that the firm has streamlined operations in the U.S., U.K., Australia and Canada, it means that Capify can extend that industry know-how even further.

On the small business borrower’s side, Capify allows an entrepreneur with businesses in any of these nations to access financing in their local currency. “If I’m an Australian business owner and I have a business in London and New York, we’re able to fund that London business in Sterling Pounds and that business in New York in U.S. dollars,” he said.

Capify partners, on the other hand, can respond to market fluctuations more adequately. Goldin pointed out that the current U.S. dollar is doing well in today’s market, so strategic partners can focus investments in Australian SMEs – or, they can spread their investments across all four nations.

These strategic partnerships could be on the rise in Capify’s future, too. While solely a balance sheet financer today, Goldin said the firm is exploring options not only to expand into new countries, but to perhaps become a marketplace lender as well, providing a way for third-party investors to connect with small businesses across the globe through Capify. That, the executive added, would also be an industry first.

But for now, Goldin said he is confident in the firm’s current business model. “On the balance sheet, we have plenty of capital,” he told PYMNTS, noting the $60 million credit line announced in 2013. Even with the new partnership with Chinese eCommerce behemoth Alibaba – a collaboration that sees Capify providing working capital to small businesses in Australia looking to procure goods from suppliers on the Alibaba platform – Goldin said the company has “no shortage of capital.”

 

PYMNTS-MonitorEdge-May-2024