Grid Finance, a cash advance lender to micro and small businesses, has secured a €100m funding line from UK alternative asset manager Fasanara Capital as part of its expansion over the next few years.
The funding, which adds to the existing funding partnership with US hedge fund Thiele Capital Management, has allowed Grid Finance to conclude that it will make no return to its original funding pool, the peer-to-peer lending market. peer-to-peer (P2P).
Derek Butler, a PwC-trained accountant who launched Grid in 2014 as a P2P lender, after four years working for aid agency Goal in Uganda and Haiti, had long campaigned for regulation of the P2P sector before than the Central Bank unveiled a scheme earlier this year. under the new European Union rules applicable to the industry.
Grid changed its business model in 2019 and left crowdfunding. It now focuses on providing short-term loans to businesses that make money from credit and debit card sales – an area known as merchant card financing.
Mr Butler told the Irish Times in recent days that the company would not return to the P2P market.
Grid has loaned around €10m in each of the past two years and expects to underwrite €25m of business in 2022. It currently charges interest rates of 7-12% per annum, depending customer risk.
Mr Butler said the flexibility of his product, which allows borrowers to make lower payments during quiet months, means his lending momentum is “very strong”, even if the underlying demand for credit among SMEs remains low.
“General credit demand is expected to remain subdued as businesses continue to determine what the post-pandemic economy will look like and they monitor inflation and other macro factors, such as the war in Ukraine,” he said. he declares.
“This is a very uncertain environment for small business owners to make decisions.”
Francesco Filia, Managing Director of Fasanara, said: “Grid Finance serves a large, addressable and often underserved demographic in the SME sector in Ireland. We are delighted to begin working closely with Grid Finance and its management team, with the aim of becoming their strategic debt financing partner and helping them scale in Ireland and beyond in the future.
Grid, which appointed former Treasury Secretary General John Moran as chairman in January, is expected to be profitable in 2022 for the third consecutive year, according to Mr Butler.