Getting finance for your business can be the fuel your company needs to reach the next level of success. Taking that into consideration, we know how difficult it is for SME's to access funding. The process is time-consuming, complicated, overwhelming, and depending on where you go, sometimes not even worth the trouble. We want to change that mindset. We want to create a community that inspires and supports the borrower.
The idea behind Investmint is to make it easier for the borrower to access funds. The platform we’ve designed creates a streamlined process where information is readily available and easy to understand. We've unpacked and uncomplicated the process of borrowing so that you can move on to the most important thing which is growing your business.
Let's take a closer look at the financing process, and how and why we've put the power in the hands of the borrower.
There are 3 main things that go into a credit agreement of any kind:
- The amount required
- The rate of interest charged
- How and when repayments are made
These terms and conditions result in a power play between lender and borrower, and in most cases, the lender lands up holding the power card and the borrower lands up having to take whatever is available on offer.
In building the Investmint community, we don't want a power struggle; we want to create a fair and just financing process.
Let's take a look at each of the 3 main things that go into a traditional credit agreement, and how we've gone about it differently.
1. The amount required
The most common form of traditional funding is a loan from a financial institution. This form of funding is generally only offered on the expectation that your business will generate additional profits. The process takes weeks, sometimes even months to complete and depends heavily on your business's financial results and credit ratings.
In the Investmint community, we acknowledge and understand that not every SME has the best financial results or credit history. That's why we're going at it a little differently. Instead of just focusing on your business's numbers, we look at what you do have, which is a great product or service that fills a gap in the market.
What we're offering is to fund business that you have already generated but need help actioning, and what this means for you, the borrower, is that the amount that can be advanced to you will not be limited by your past financial results, but rather by how much you can sell NOW.
2. The rate of interest charged
With most traditional lenders, the interest rate you are charged is usually determined by an algorithm and is based on the level of risk inherent in your past financial results. The variables for these algorithms aren’t usually communicated clearly from the start.
We've taken a different approach. In building a fair Investmint community, we believe a good interest rate should be a reward for being a responsible borrower; and a responsible borrower makes repayments on time.
How much you pay, is entirely up to you. By linking your interest rate to your repayments, we are giving you full control over how much you have to pay.
3. How and when repayments are made
When it comes to a credit agreement, all parties involved must agree upfront on the length of the agreement and worst-case payment plan.
Since loans are linked to a specific invoice or project, we encourage borrowers to match their loan structure to the expected cash flow of the project. We then give you the option to repay the capital after 1, 2 or 3 months - however, you retain the right to settle any part of the capital owed earlier than agreed, with no penalty. Repaying early also recalculates your interest based on the new capital amount.
When it comes to late payments, we know and understand that these things happen; it's a part of life and sometimes late payments are outside of your control. To mitigate this, we've included a "renegotiate" option, which means if you're expecting a repayment delay for whatever reason, you can request to renegotiate a new payment date with your investors. The great thing about this option is that it does not affect your repayment rating.
The investors, however, are by no means obligated to accept a new payment date. As the borrower, you are contractually bound to make repayments based on your upfront agreement dates, however, we do ask that our investors consider the spirit of the Investmint community in making their decision.
You are still required to pay additional interest on the outstanding amount, but a renegotiated payment is not considered “late” in the calculation of your on-time-repayment score
The financing process that we have created is slightly more flexible than your traditional funding process. We don’t require weekly or monthly repayments because we understand that most businesses cash flow comes in at the beginning and end of the month and not the middle.
We want SME's to succeed, that's why we’re thinking outside of the box, and trying our best to avoid any additional pressure for our borrowers such as having to make weekly repayments in the middle of the month when cash flow doesn't allow.
We want to assist borrowers in setting up agreements that match the expected cashflow timings of their project or invoice.
These features above are part of Investmint’s approach that helps borrowers maintain control over their finances and therefore their company.
