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

Dutch payment provider, Mollie, has expanded into the finance industry with the launch of Mollie Capital, a cash advance product for small and medium-sized businesses.

According to Mollie, the new Mollie Capital is an alternative to traditional financing that allows customers to receive the necessary financing in a fast and efficient way, with the entire process managed in the same platform where they receive their income.

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 your SME’s funding request within 24 hours.

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

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

Before the launch, Mollie tested its new offer with a few selected customers.

Dutch hair extension service Glamor Your Hair, which used 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 at 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 in the Mollie dashboard (if they choose to do so), instead of dealing with different financial service providers .

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

Mollie is currently looking at Germany and France to roll out its new service, with plans to eventually expand to all countries where 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 rather than traditional banks, whose robust requirements and time-consuming process can put off borrowers.

In recent years, cash advance providers have announced lending milestones in the hundreds of millions, demonstrating the accessibility of SME borrowers to alternative lenders.

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

Global economic conditions make alternative borrowing attractive

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

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

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

In a separate study by the ECB on the effects of fintech lending on SMEs, the ECB concluded that “SMEs applying to FinTech platforms want to reduce their exposure to shocks to the banking system, which could limit their available funding and ultimately affect their growth .”