Online SME Lender October Raises €295 Million, as of Dec 2020, to Finance Businesses, the Largest Amount it has Ever Raised

Europe-based online SME lender October says there’s probably no need to describe or go over how our lives have been impacted by the COVID-19 outbreak. October claims that they had to “become economists, epidemiologists, and politicians” in order to cope with the challenges created by the pandemic.

As noted by October, the first lockdown period, due to COVID, was quite predictable but also  “completely shocking.” The digital lending platform confirmed that initially, there weren’t any state-guaranteed loans nor furlough schemes to support small businesses during these unprecedented times. October acknowledged that “the worst” could have happened due to the socioeconomic challenges created by the Coronavirus crisis.

As mentioned in a blog post by October:

“We knew one thing: it doesn’t help to push down on a drowning person’s head. It made no sense to press our borrowers to repay their loans when we knew their great difficulties. That’s why we decided to take a strong and dramatic step: ask our lenders to vote on a three-months capital repayment freeze. We wanted to give our borrowers some breathing space, waiting for better days. October was also affected; this decision meant a three-months revenue loss and, as suspected, there were very few new loans happening to compensate.” 

However, October also mentioned that it “felt strongly” about putting a freeze on their running fees, “to show interest alignment with lenders.” The online lender confirmed that they were all in “the same boat, in gale-force winds….”

That’s why, as early as March 2020, October introduced (not without “some apprehension”) a “massive electronic consultation of our 25,000 retail lenders (thanks to our technology!) and institutional investors.”

October reveals that 99% of its platform lenders (or investors) had voted to support their SMEs.

And in the midst of all these challenges, “the few published projects were financed in a matter of hours, even minutes, by thousands of lenders determined to support entrepreneurs,” October claims. It also mentioned that Bpifrance and ICO, the French and Spanish public investment banks, also “put their trust in us with new funds.” October acknowledged that “at the beginning of the pandemic, this gave us a huge moral boost.”

As noted by October:

“This extraordinary situation was an opportunity to make an inventory of our strengths, to prepare our future in this new world. Obviously, our technology, six years of collected data and our European presence are the best foundation for a strong, resilient October. We decided to innovate around these key areas and launched three major initiatives.”

First, the October team introduced Instant Project for State Guaranteed Loans. As explained by the lender, we can think of a firm requesting to obtain a loan in the morning, and “receiving a decision instantly, its contract within a few hours and its money transferred shortly thereafter.” As confirmed by October, the entire process is handled “remotely and without sacrificing quality or anti-fraud checks.”

In August 2020, La Fenice Srl, an Italy-based firm, was “one of the first to receive a €45,000 state-guaranteed loan with Instant decisioning.” On this particular occasion, October said it would “like to thank the Italian, French and Dutch government for allowing lending platforms to distribute state-guaranteed loans.” Last year, there were reportedly 247 state-guaranteed loans that were funded via the October platform and this is expected to continue in 2021.

As mentioned by October:

“Our second initiative was targeted to the Tourism sector. We support and are historically familiar with this industry at October (our first borrower was a famous chef) and we are convinced it will get back on its feet, even though it is currently one of the sectors that suffers the most. They need a specific offer (deferred amortising loans) and committed lenders (the French financial institution Caisse des Dépôts and insurers). The summer was enough to set up a dedicated offer for French companies.”

They further noted:

“Last but not least, the launch of October Connect. Our tech toolbox for institutions who finance businesses. What we focus on at October (reinventing the relationship with borrowers, distributing loans remotely, controlling fraud, making better use of the data collected, reducing loan management costs…) are challenges that all financial players are taking up, starting with banks. Our strength? To be able to reinvent this service without the weight of history and transform it into an efficient and ready-to-use tool for financial institutions.”

Last year, even though it was challenging to get things going, October reports that it managed to support 395 SMEs (an increase of 75% compared to 2019) “representing 16,697 jobs and €5.74 billion in revenues (1 SME per day, Saturday, Sunday and lockdown days included).”

During the past quarter, October reportedly “passed the symbolic milestones of €500 million lent, 1,000 funded projects (1,182 to date) and one million loan parts granted by retail lenders.”

Last month, October issued loans worth a total of €24 million to 70 firms “signed the most active month in our history.” October also secured €295 million to finance local companies. As noted by the online lender, this is “by far the largest amount we have ever raised.” The digital lending platform also mentioned that they received “a record financing of €200 million in Italy led by Gruppo Intesa Sanpaolo.”

October further noted that as “a sign of the adoption of our radical innovation, we have signed our first major client for October Connect (we will keep the surprise of its name for the coming weeks).”

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