Froda, Lunar and Visa unveil innovative SME lending solution
Published 20/6 2023.
Access to financing has long been a major hurdle for businesses eyeing growth. Against this backdrop, Visa, Froda and Lunar are announcing a global partnership and launching a new, innovative technology aimed at resolving these issues – for good. The product, which for the first time utilizes push- payment functionality for financing, aims to reduce transaction times to mere seconds. Ordinarily, this process would have taken months.
The fintech company Froda has formed a partnership with Visa to develop a brand-new loan solution for businesses. Initially, Froda and Visa are joining forces with the Nordic digital bank Lunar. Within the framework of the partnership, Lunar’s customers gain access to business loans through Froda’s proprietary embedded lending platform, featuring direct payments and repayments via Visa’s card. Visa’s presence in over 200 countries and territories provides a consistent experience regardless of market, making the product globally scalable.
– I am thrilled to announce our collaboration with Visa and Lunar to bring a new level of convenience and efficiency to the world of business lending for SMEs. Our goal was to create a new ecosystem within embedded lending that would offer entrepreneurs easy access to financing and instant payouts. With the support of Visa, we are able to offer this innovative solution to both neobanks and incumbent banks across multiple markets. We couldn’t be more excited about this partnership and look forward to seeing this new ecosystem grow, says Olle Lundin, CEO at Froda.
At a time when the economy is facing headwinds, access to financing becomes even more important for startups and small businesses looking to invest for the future. In order to support SMEs in the best possible way, it is crucial to find new ways to efficiently distribute SME financing. The solution aims to remove barriers by allowing loan repayments and payouts to be made directly through a payment card. Customers repay their loans through recurring card payments without having to track and manage monthly invoices.
– At Visa, we are constantly seeking new innovative ways to leverage the use of card infrastructure. The solution Froda has developed offers something new to the embedded lending ecosystem. We are very excited to be a part of this and can't wait to see the impact it will have on small business lending, says Philip Konopik, Regional Managing Director Nordics & Baltics at Visa.
By using Visa's infrastructure, the solution provides a consistent experience for customers regardless of market, without the need for adjustments to local invoicing and direct debit processes. Partnering up with card issuers will provide a source for transaction data to enhance credit scoring and ability to present accurate pre-scored available credit to customers.
– It’s a fantastic opportunity to be a part of this collaboration as it allows us to offer our customers a fully digital experience with card enrollment as part of the loan application process. This eliminates the need for a separate enrollment for direct debit solutions or collecting details for invoicing. Additionally, the ability to make instant loan payouts through push payments ensures that our customers can access the funding they need quickly and efficiently, says Mats Persson Bergius, General Manager, Sweden, at Lunar.
The embedded lending solution will be accessible to Lunar's customers in Q2 2023, with the possibility for more SME card issuers to join.
About the product
Froda will provide the product as an API-based white-label service in partnership with issuers of Visa business cards. SMEs will be able to apply for a business loan directly through their card provider (e.g. Neobank). The fully digital application process only takes a couple of minutes and will be embedded in the partner’s app or web app interface. As part of the application, customers will enroll their business card for loan payouts and recurring transactions for future amortization and interest payments. In the background, Froda makes an automated risk assessment of the SME and once the digital contract has been signed, Froda will immediately initiate a Visa Direct push payment for the loan amount, arriving in the customer’s bank account within seconds. Tokenization ensures that cardholder information is protected and kept up to date without the need for the customer to re-authenticate themselves when amortization and interest payments are made.
Froda was founded in 2015 with a clear vision – to revolutionize the banking experience for entrepreneurs by making it easy and affordable to invest in their ideas.
Today, Froda is one of the fastest-growing fintechs in the Nordics with large international growth plans. So far, Froda has helped over 50 000 business owners to invest in their ideas. Froda is a regulated credit institution with government deposit guarantee and is under the supervision of the Swedish Financial Supervisory Authority.
Lunar is a Nordic digital challenger bank founded in 2015 in Denmark with operations in Denmark, Sweden and Norway, serving more than 325,000 users on its platform. In total, Lunar has raised more than EUR 300 million in equity funding and received a European banking license in 2019.
Visa (NYSE: V) is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative, convenient, reliable and secure payments network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone everywhere, uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at Visa.se.