Applications for microfinance submitted by small entrepreneurs, up 30pct (analysis)

The number of applications for microfinance submitted by owners of small businesses increased at the beginning of March by 30% over the previous months, show data released Thursday by a Romanian microfinance fintech platform.

"After a detailed discussion with them, we find funding solutions that they are not even aware of: many entrepreneurs have bills or IOUs and checks to service, and their small businesses actually need cash. What do I recommend these days in the business relationship between these small businesses, if they have the role of supplier and beneficiary: a lot of empathy and understanding to overcome the situation and to make use alternative financing options," explains Elisa Rusu, CEO Omnicredit.

According to the company, the number of loans granted by Omnicredit has been steadily increasing, from one month to the next, with a relevant weight among the credit products being held by the factoring product (approximately 58% of the total funded portfolio), followed by discount and microcredit products.

"Most small companies face a significant difference between the payment deadlines to suppliers and the payment deadlines to customers. This is especially true among small entrepreneurs, who do not have the bargaining power with large customers or who feel strongly competing. Between these companies, during this time, the financial resources of the company become limited, difficulties arise in making payments (taxes, salaries, suppliers, rates), eventually leading to even affecting the development of the company caused by the impossibility of being able to meet financial obligations, and even facing blockages that lead to insolvency. By such factoring and discounting operations, the seller can obtain immediate collection for his invoices, which positively impacts the cash flow and the balance sheet of the company, and the payer can optimize capital through extended payment terms above," according to Omnicredit specialists.

Overall, according to data centralised by the platform, microfinance applications submitted by small business entrepreneurs increased at the beginning of March by 30% on a monthly basis months.

Omnicredit.ro is the first fintech microfinance platform in Romania that offers factoring, discounting and microcredit products, quickly and with a minimum of papers.

This platform offers legal entities can access exclusively online eight types of financial products in the categories microfinance, factoring and discounting. Entrepreneurs need 30 seconds to register, one hour for the lending decision, and they can have the money in their account in eight hours' time, at the latest.

The standard amounts granted by Omnicredit reach 250,000 lei, and the commissions for the factoring and discounting services are between 1 and 3%, depending on the amounts and the periods requested. On the microcredit side, the maximum period of financing is 12 months, with a monthly interest of up to 3%, which is calculated after analysis.