Somewhat inevitably, card products have arrived in the UK’s online lending space.
Just Cash Flow PLC, an alternative lender that provides credit facilities to small businesses, becomes – to our knowledge – the first European platform to offer customers a card-based solution. The “BusinessPlus MasterCard” will allow small businesses to access credit lines of up to £10,000 in amount – with a flexible repayment structure attached.
No interest will be charged on the facility until funds are drawn down. The drawing down of funds entails loading money onto the newly unveiled BusinessPlus card. Once drawn, borrowers will be charged an interest rate of 0.075% a day until the money is repaid. The facility itself sits within the Just Cash Flow platform until drawn down by the borrower.
We asked Just Cash Flow Director John Davies what benefits the new product will bring to the platform’s customers. He explained that the card will offer users “complete control” over their finances. Borrowers can load the card with funds at a moment’s notice, for the purpose of anything from covering the expense of a delivery van breaking down, to funding a sudden need for temporary staff. Repayment may be completed within a day or within two month’s time – it’s up to the borrower.
Davies also admitted that the BusinessPlus card is, in effect, a replica of a bank overdraft – albeit a more expensive one. Of course the benefits are that borrowers are able to gain swift access to bite-sized chunks of funding, rather than to committing to a large and cumbersome bank solution.
Davies weighed in:
"Today it's not enough to simply provide SMEs with much needed funds - they need quick and effective access to really help them manage their day to day transactions and cash flow. Cheques are rapidly becoming a thing of the past and our customers tell us what they really need is the ability to use the finance facility we provide at the point of sale."
"We are anticipating strong demand for the card as even when SMEs are provided with finance is it is difficult to get a business card as traditional banks want to see at least two year's trading history. Even then they prefer the discipline of providing a charge card that has to be repaid in full every month - not ideally suited to managing cash flow issues.”
“Many business owners use their personal credit cards to cover any cash shortfalls. However, mixing up your personal and business finances can lead to all sorts of complications; especially when trying to get an accurate picture of how the business is performing and when you come to file your end of year accounts and tax returns.”
This is not the first time in the wide world of online lending that a platform has come up with an innovative card-based solution. US based lender Kabbage rolled out the Kabbage Card in May 2015. But the Just Cash Flow BusinessPlus card is Europe’s first. We rather doubt that it will be the last.