Defacto Secures New Credit Facility to Provide Instant Financing for Small Businesses

French startup Defacto has closed a new securitization fund that will be used to provide short-term loans to small and medium-sized businesses via an integrated API-based approach. This is a new fund of up to €167 million ($183 million) with Citi and Viola Credit acting as lenders.

This is important news for the startup as it means they will have more capital to deploy, which will ultimately generate more revenue.

As a reminder, Defacto wants to offer credit products using an API in the fintech products you already use. With this integrated financing strategy, Defacto can leverage the customer base of these existing products.

In particular, Defacto wants to help you get paid faster so you can pay your employees or suppliers and act faster. For example, you can submit your claims to Defacto and immediately release capital. You can then repay your loan by direct debit whenever your customers have paid pending invoices.

Similarly, if you're carrying a lot of cargo, you might be limited by the cost of your inventory. Even if you have no problem selling everything you make or resell, you may not have enough capital to pay your suppliers right away.

Defacto can pay your suppliers for you. Your company will then reimburse Defacto when you have generated enough sales. The startup specializes in short-term loans like this.

The company has rolled out integrations with popular fintech startups and marketplaces, such as Malt, Qonto, Pennylane, and Libeo. By integrating Defacto as a financing partner, these companies can provide another service without becoming a credit institution. Defacto may also leverage customer data from these partners, which should improve the credit decision engine.

Companies can repay Defacto loans after just one day or wait up to 120 days. On average, businesses repay their loans after 60 days. With a loan fund of up to 167 million euros, this means that Defacto will be able to lend up to 1 billion euros per year.

"We are delighted to secure this facility with Citi, one of the largest banks in the world, and to see Viola Credit renewing its confidence in Defacto's team, strategy and product," said the co-founder and CEO Jordane Giuly in a statement. . "In the current macroeconomic environment, this is an important step to enable our growth with existing and new partners and meet the financing needs of thousands of SMEs."

This is a big step forward, as the company has funded €200 million in credit for 7,000 businesses. The startup charges interest daily.

Silvr, another French startup that offers additional working capital, recently closed a securitized facility with Channel Capital and Citi as well. Smart Lenders AM is also one of Silvr's existing debt capital partners. It does not have the same positioning as Silvr focuses on revenue-based financing and can offer 12-month financing plans with fixed repayments or revenue-based repayment plans. Silvr competes with Karmen and Unlimited.