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Fintech challenger, Mollie makes inroads into financial services with new launch

Mollie tests the water with cash advance offering targeting SMEs

  • Rajeeb Gurung
  • September 27, 2022
  • 3 minutes

Dutch payment provider, Mollie, has expanded into the financial services industry with the launch of Mollie Capital, a cash advances product for SMEs.

According to Mollie, the new Mollie Capital is an alternative to traditional financing that enables customers to receive the necessary funding in a quick and efficient manner, with the entire process managed in the same platform where they receive their revenue.

Customers using Mollie Capital will be able to apply for cash advances of up to €250,000 via the Mollie dashboard. Mollie will process and resolve the SMEs’ request for funding within 24 hours.

In an emailed statement to Bobsguide, Rogier Schoute, chief product officer at Mollie, said, “We want to help our customers by giving a fast and flexible way for them to access funding, so they don’t have to go through lengthy, cumbersome requirements to get financing, and instead can focus on their business and use Mollie Capital to buy inventory, fund marketing campaigns or invest in business expansion.”

Mollie will automatically take a portion of daily sales from the SMEs as repayments and will also charge a fixed one-time fee for the service.

Prior to launch, Mollie tested its new offering with a select few customers.

Dutch hair extension service, Glamour Your Hair, who utilised the service applauded Mollie Capital’s automatic repayment scheme as a welcome feature.

Mollie plans to bring cash advance service to more countries

According to Shane Happach, CEO of Mollie, the launch of Mollie Capital marks the company’s “first step towards becoming a financial services provider.”

Schoute also acknowledged the fintech’s ambition to expand its services and explained that Mollie is looking into ways to “help merchants with their liquidity and cash flow challenges.”

He added, “We want to help our customers save time and money by managing more of their financial processes within the Mollie dashboard (if they wish to do so), instead of dealing with various financial services providers.

Mollie Capital will initially be available to select businesses in the Netherlands and Belgium.

Mollie is currently looking at Germany and France to roll out its new service, with plans for the eventual expansion to all countries in which Mollie operates.

SME borrowers turn to quick lenders

Mollie’s move to offer cash advances to SMEs comes at a time when SMEs are increasingly borrowing from alternative lenders instead of traditional banks, whose robust requirements and time-consuming process may put off borrowers.

In recent years, cash advances providers have announced lending milestones of several hundred million, showcasing the availability of SME borrowers for alternative lenders.

UK fintech companies, Liberis and Optimum Finance are two such alternative lenders that have claimed to have advanced over £500 million to UK SMEs.

Global economic condition makes alternative borrowing attractive

The popularity of alternative lenders among SMEs is also the result of wider economic trends.

A 2022 study by the European Central Bank (ECB) on the access to finance for SMEs highlighted the adverse impact on the availability of funds for companies due to the macroeconomic environment owing to the Russian invasion of Ukraine, high inflation, and general global instability.

It pointed out that “firms anticipated a deterioration in access to bank loans and credit lines” due to global political and economic uncertainty as well the rising interest rates.

In a separate study by the ECB on the effects of fintech lending on SMEs, ECB inferred that “SMEs who apply to FinTech platforms want to reduce their exposure to shocks to the banking system, which may curtail their available financing and ultimately, adversely affect their growth.”