Froda, Visa and Lunar launch new global financing solution to help SMEs grow
Lack of available funding has long been one of the biggest obstacles for businesses looking to grow. That's why Visa, Froda and Lunar are partnering globally to launch an innovative new technology that aims to change this for good. The product, which for the first time uses push-payment functionality for financing, aims to reduce both processing and transaction times to seconds. Something that previously took several months.
Fintech company Froda has partnered with Visa to develop a brand new lending solution for entrepreneurs. Initially, Froda and Visa are working with the Nordic digital bank Lunar. The partnership will allow Lunar's customers to access business loans via Froda's embedded lending platform, with direct disbursements and repayments via debit cards. Visa's presence in over 200 countries provides a consistent experience for customers regardless of market, making the product globally scalable.
- I am delighted to announce our new partnership with Visa and Lunar. Our goal was to create a new ecosystem in business finance that gives entrepreneurs easy access to funding with direct payments. Thanks to the partnership with Visa, we can offer a solution to both neobanks and big banks on a global scale. This is a major milestone in fintech, but above all for all the millions of entrepreneurs globally who can now grow on the right terms," says Olle Lundin, CEO of Froda.
In challenging economic times, access to finance is more important than ever for businesses to invest for the future. The new solution aims to remove unnecessary barriers by digitizing the process and allowing disbursement and repayment directly via a payment card. With the new product, customers can pay off their loans via recurring card transactions and avoid monthly invoices.
- At Visa, we are constantly looking for new innovative ways to use the card infrastructure. The solution that Froda has developed offers something new in corporate finance and embedded lending. We are very excited to be a part of this and look forward to seeing the impact it will have on business lending," says Philip Konopik, Regional Managing Director Nordics & Baltics at Visa.
Visa's global infrastructure allows the new product to offer the same solution regardless of the market, without the need for local adaptations for billing and direct payments. Partnerships with various neobanks and card issuers enable international expansion. It also provides access to transaction data for better credit assessments, for example by offering more accurate pre-scoring of the customer's available credit.
- It's a great opportunity to be part of this collaboration, as it allows us to offer our customers a fully digital experience with the payment card application as part of the loan process. In addition, we do not need to create separate processes for direct payment application and billing information. Through direct loan disbursements, our customers can quickly and easily access the financing they need," says Mats Persson Berguis, General Manager at Lunar.
The product will be available to Lunar's customers in the second quarter of 2023. More card issuers for entrepreneurs can connect to the product.
About the product
Froda will provide the product through an API-based service in partnership with Visa corporate card issuers. Businesses will be able to apply for a loan directly through their card issuer (for example a neobank). The fully digital application process takes just a couple of minutes and is built into the card issuer's app or web portal. As part of the loan application, customers will be able to register their business card for loan disbursements and future amortization and interest payments. In the background, Froda performs an automated risk assessment of the company. As soon as the digital contract is signed, Froda will initiate a Visa Direct disbursement of the loan amount and the money is in the customer's bank account in just a few seconds. Through tokenization, the cardholder's information is securely managed and kept up to date, without the customer having to confirm their identity at each repayment or interest payment.
About Froda
Froda was founded in 2015 with a clear idea - give small and medium-sized businesses the same opportunities to grow as large ones. The company's service makes it easy and affordable for entrepreneurs to invest in their ideas. By digitizing the process, Froda has made it possible to help more companies with financing tailored to their unique business and its needs. A smarter business loan, simply put.
Today, Froda is one of Sweden's fastest growing fintech companies and has helped more than 50,000 companies grow. The company is a credit institution covered by the state deposit guarantee and is under the supervision of Finansinspektionen (FI).
About Lunar
Lunar is a Nordic digital banking challenger with operations in Denmark, Sweden and Norway. The company was founded in 2015 and has a total of more than 325,000 users on its platform. In total, Lunar has raised over €300 million in equity and in 2019 the company received a European banking license.
About Visa
Visa Inc. (NYSE: V) is the global leader in digital payments, offering transactions between consumers, merchants, financial institutions and governments in over 200 countries. Our mission is to connect the world through the most innovative, trusted and secure payment network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone, everywhere, also lift up everyone, everywhere - and we see accessibility as fundamental to the future of transactions. Find out more at Visa.com.
