Fintech Froda , digital challenger bank Lunar and Visa have partnered to deliver an SME lending solution to help businesses access financing for their growth initiatives. The solution, which leverages push-payment functionality for financing, aims to help decrease transaction times to seconds within a process that would normally have taken months.

Product capabilities Froda is set to provide the solution as an API-based white-label service in collaboration with Visa business card issuers, and SMEs will be enabled to apply for a business loan straight from their card provider. The fully digital application process is done in a couple of minutes and is set to be embedded in the partner’s app or web interface. As part of the application, customers have their business cards enrolled for loan payouts and recurring transactions for future amortisation and interest payments.

In the background, Froda carries out an automated risk assessment of the SME and following the signing of the digital contract, the company initiates a Visa Direct push payment for the loan amount in an immediate manner, which then arrives in the customer’s bank account within seconds. What is more, tokenisation helps ensure that cardholder information is protected and kept up to date, with no requirement for the customer to re-authenticate themselves whenever amortisation and interest payments are made. Froda, Visa, Lunar collaboration details Froda partnered with Visa for the development of a new loan solution for businesses, and the companies are set to join forces in an initial stage with the Nordic digital bank Lunar.

As per the press release, within the partnership’s framework, Lunar’s customers are enabled access to business loans via Froda’s proprietary embedded lending platform which features direct payments and repayments through Visa’s card. Olle Lundin, CEO at Froda stated that through the collaboration with Visa and Lunar, a new level of convenience and efficiency is brought forth to the world of SMEs business lending, with the company having the goal to create an ecosystem within embedded lending that would provide easy access to entrepreneurs to financing and instant payouts. The press release details that when the economy is ‘facing headwinds’, access to financing for small businesses and startups looking to invest towards the future becomes increasingly important, and to support SMEs as well as possible, finding new ways for the efficient distribution of SME financing is believed to be crucial.

The companies’ solution is looking to remove barriers by enabling loan repayments and payouts to be carried out directly through a payment card. What is more, customers can repay their loans via recurring card payments with no need for monthly invoices tracking and management. As it leverages Visa’s infrastructure, the solution offers a consistent experience for customers regardless of market, without having a requirement for adjustments to local invoicing and direct debit processes.

Furthermore, collaborating with card issuers will provide a source for transaction data to help improve credit scoring and the ability to present accurate, pre-scored available credit to customers. Mats Persson Bergius, General Manager, Sweden, at Lunar stated that by being part of this collaboration, the company is enabled to provide their customers with a fully digital experience, with card enrolment as part of the loan application process. This is believed to help eliminate the need for separate enrolment for direct debit solutions or for the collection of details for invoicing.

Additionally, the capability of carrying out instant loan payouts via push payments helps ensure that customers can access the needed funding in a quick and efficient manner. As per the press release, Lunar’s customers will have access to the embedded lending solution in Q2 2023, with the possibility to have more SME card issuers join. .