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Credits for online retailers
Instant financing / corporate financing with Banxware
This episode is about credit for online retailers. How you can get instant financing or business financing uncomplicated and fast with Banxware, you will see in this video. Stefan the Head of Sales of Banxware answers all your questions about the topic. In the following, below the video will be the video between Annika and Stefan.
Loans for online merchants - What is Banxware?
Hi Stefan good to have you here. Maybe we’ll just start with that, you might introduce yourself briefly and maybe Banxware. What do you actually do? Where do you come from?
Hi Annika, glad to be here. Yes, you already told me my name – Stefan – I am Head of Sales and Business Development at Banxware. Banxware is a Berlin-based fintech that has made it its mission to provide small and medium-sized enterprises with easy access to liquidity, i.e. working capital loans to be more precise. We are now doing this with 65 people, are a little over two years on the road and have as a focus primarily e-commerce retailers, online retailers who are registered in Germany and just make online sales, to which we believe we provide a very digital lean and fast way to get additional capital.
Super. Especially when you say online retailers, we are already in the B2B, B2C area, where platforms are becoming increasingly important and you also work together with them. Maybe you can explain once very briefly what makes you so special nor a process so lean.
Yes, exactly, so you have already addressed an essential point, perhaps to expand a bit. We offer what is known as revenue-based financing. This means that, unlike traditional banks, we do not usually look at typical financial documents such as annual financial statements or BWAs, but are primarily interested in seeing how the most recent sales of online retailers are developing. This can be your own Shopify store, or Shopware, or in Magento store. But that can also be sales via the classics Amazon or eBay, or even any hood marketplaces. And that’s where we look to determine whether we can offer financing to the dealer, and in what amount and under what conditions. And collaborating in the sense that we support virtually all platform, or all types of online sales. So we offer the merchant the ability to link their accounts – their Amazon Seller account, for example – to us so that they can submit sales without having to somehow manually download reports and submit them back to us. We then look at it and make a loan offer very quickly, i.e. within a few minutes.
What documents do I need to submit?
Great, now you just told me I don’t need BWA and physical records. What do I need?
So it’s often the case that the topic of financing is something I do quickly in the evening at the kitchen table, and then a service provider tells me “yes, yes, you only need 10 minutes”, but my preparation then takes perhaps three hours sometimes everything has to be collected together. Is that the same for you guys?
Yes, so in the vast majority of cases, and by that I mean now somehow greater than 95%, we actually get around any kind of evidence. So that means that not only do we somehow not need any physical documents, but really it goes completely paperless, also no BWA as a PDF or something. There are actually two key things: one is the sales channels, as we mentioned earlier, so somehow Amazon Seller sales, Shopware sales, whatever, or Paypal, for example. And then the second step is that we require a bank account link. So the merchant logs on to their online banking once, gives us the view of the transaction and that kind of replaces the financial documents that are just usually necessary for us. Yes, and exactly by this combination we make it possible then evenly that we do not have to ask for any documents, or in the worst case even still somehow the dealer to it again with the tax adviser the last BWA with which the could not be co-ordinated yet to the last minute number to submit. And that, of course, makes the whole process leaner. And we put a lot of emphasis on offering it to the retailer in self-service, if possible. Yes, so that’s exactly your point, I’m sitting on the sofa after the day’s business at 10 o’clock and it occurs to me that I now have the opportunity to buy a large contingent at favorable conditions and need another 50,000 euros from somewhere quickly. Then this is just a solution that can perform completely by ourselves. So he doesn’t need his tax accountant, or any documentation on that. But he usually doesn’t need any of us to do it either. So we offer the possibility of course during normal business hours support, so it goes via chat, phone, email of course. But at 10 a.m., as a rule, no one would have to reach us live, and our entire application process is designed to ensure that the dealer really knows where he stands and that he can complete all the steps independently for the time being.
Credits for online retailers - How much can the credits be?
Now you just said 50,000, for example. So what are the ranges and what dealers is this actually for? Or the cases, do you have such typical cases, when do traders actually come to you?
Yes, maybe first your first question: in what area do we offer financing? Currently between 1000 and 100,000 euros. So that’s so the spectrum that we choose we make the merchant happen on his sales maximum credit offer, and he can screw that down. So, if we were to offer him 75,000, for example, he can take it, but he doesn’t have to. If he now says he only needs 25,000, then he can configure how many he really wants via sliders. He can also choose how long he wants to pay it back, so he can determine the term himself and then also see a price right there.
To your second question is also very exciting, what are the use cases? What do our dealers, our customers, use the capital we provide them for? This is really very broad and I think this is also a special feature of Banxware. We don’t give the dealer any specifications, so it’s very common with other suppliers, That you have a very specific use of loan funds. So, for example, you want to buy machines, then you go to your house bank and then this machine is deposited as collateral, and then you can really only use the money for this machine purchase. Sometimes there is also a merchandise financing, there is then really the goods secured and in case of doubt you can also not just access it, but there are certain restrictions. And that is just different with us, but it is an uncommitted credit – that means it is up to the trader what it is used for now – so he can also say, for example, with half of it I somehow buy goods from my Asian supplier, with the other half I somehow hire seasonal workers. And that is completely up to the dealer. But of course we are still interested in what our dealers use, and that’s why we always ask them, too, to understand what is probably the greatest need.
What are the use cases?
I think a really very commonly seen use case in the field is really such spontaneous purchases. So somehow there is a special offer, residual costs for example, or the Chinese supplier says “Hey, if you take double the quantity, then I can make you a much better unit price”, and the trader can then well estimate whether he will get rid of the goods, but he then suddenly has him the situation he must now find somewhere additional 50,000 – 60 – 70,000 euros capital. And most of the time there is relatively little time. This little time is then usually not enough to go to the house bank and explain to them what you are actually planning and then somehow wait two weeks and submit the documents. So very often it’s kind of spontaneously occurring opportunities to put the trader.
Another very common use case is actually very strong growth. So we have a lot of relatively small and young companies, so e-commerce really hype brands, so to speak, that are also going through the roof on Instagram, that started maybe a year ago and have almost doubled their sales every month. In their case, growth is often limited by liquidity. So they could actually sell more, but can’t afford to buy on one side and pitch that and then maybe invest in marketing. I think those are the two most common use cases that we see.
Credits for online retailers - The two models
Okay, that basically means for you, or is it interesting for me, if I am a young company that either really has liquidity bottlenecks and wants to grow, or if I say I just need money now for a short time and you are not the typical, so the terms of the loan – there now also come to – are not now as with the house bank that I really pay it off over 15 years, but you have shorter terms?
Exactly, so you already mentioned it, I think so the two models where it makes the most sense, our solution is actually either very young companies. As a rule, you will not get a loan at all from traditional banks if you have not been on the market for at least two – three years, and can also prove annual financial statements with a positive result, that’s just the way it is. That means there’s kind of a sweet spot with us, because we’re looking at just six months of sales, so much less, we’re going in much earlier. And the other is actually where we also have established companies, some of which have been on the market for 15 years and are also, to a good extent, a good deal larger and are perhaps now also growing at such an ambitious rate, that they just suddenly have financing challenges. So exactly this case just they would now have the opportunity to access even in the great super detail, but post and must now somehow very quickly within until the end of the week just bring additional liquidity. And then there are also really – and you also mentioned this – use cases where we are not the right financing partner at the moment and probably not for the foreseeable future, but where you are probably better off with a house bank or with alternative financing of a different kind. So if you’re thinking now how you’re going to finance your new warehouse half a million over the next ten years, then we probably so stand now definitely can’t help you and honestly that’s probably not going to be our focus. Rather, we are concerned with relatively short-term liquidity, both in terms of providing liquidity and repaying it. Currently we have terms between 3 and 12 months, so maximum year you can get financing with us.
Who gets a loan?
Okay, and what are the legal frameworks? So I’ve already noticed, I have to give my evaluation somehow, but is it enough if I’m a private person – that is, a sole proprietor – or do I have to have a certain legal form, do I have to have a limited liability company, or can I apply for the loan with any legal form and where does my company headquarters have to be? So that’s enough even if it’s in Switzerland, isn’t it?
Yes, to your first question, yes. To your second question, no. I would briefly elaborate. In principle, we support any type of company for the time being. So both in sole proprietor, or invited merchant – as well as a GbR, GmbH, GmbH & Co – we support all, there’s no restrictions. However, there are restrictions on the location of the company. At the moment we are actually only active in Germany, so the company has to be registered in Germany, that’s a requirement. We are currently preparing our market launch for the Netherlands. This means that we will be able to serve Dutch dealers from quarter 01/2023 at the latest. But at the moment, Germany is really the only market we can serve. Otherwise, you’ve actually already said it exactly, so there’s not really much more hard restrictions, the six month minimum purchase history, I had already addressed that. This is the third point that must be fulfilled, so to speak.
Cyclical vs. acyclical business
Okay, that basically means to sum it up: I have to have digital revenues, I have to be somehow connected to my platform or something else, I have to be based in Germany, and the legal form doesn’t matter for now. That sounds quite straightforward. What do I do if I’m now a company that has a lot of seasonal sales? So classically, I am such a store that sells gifts for children at Christmas time – is then my busy season – what do I do with you? Can I call there and say half a year is now uninteresting for you?
Yes, in fact, it’s the opposite, you don’t even have to call us, but very likely one of my colleagues from the Risk and Operations department would contact you. If you were to indicate in the first field that you would make, for example, let’s say 200,000 euros in sales, or 500,000, and we were to look back now, because your “busy season” only comes 6 months ago, and would probably only see 50,000 euros in sales, then of course they would ask a little bit “how can that be?”and then they would look a little bit into your company, and in the meantime we have gained a little bit of experience, and actually quite good experience, and of course we know what typical cyclical sectors and industries are, and then they would get in touch with you again, so to speak, and then it could actually be that they say: “hey, could it be that you somehow do your main business between Black Friday and Christmas”, would you like to provide us with a little bit more documentation, or a little bit more data. This means that we can take a longer period of time into account, so to speak, and can also offer very cyclical businesses without any problems.
Loans for online retailers - What collateral is required?
On the contrary, many of our customers are very cyclical, and that is now in October, of course, the last to stock up for Black Friday or the Christmas season, and we see a correspondingly high demand. Especially with these – I say now – consumer items that are very much in demand around Black Friday and Christmas time.
That’s quite a lot of fluctuation in there then, do you want to have securities then, or do you really not say at all also in such cases we don’t care?
So the legal term is actually that it’s an “in rem unsecured loan.” That means we don’t look at a machine you might buy, or even your goods on it, and somehow put our hand on it. And another special feature we also do not require a personal guarantee. Very often, if you have a limited liability company and you go to a bank or an alternative financing partner, they want a personal guarantee from you as a company or managing director. This means that although you actually have the GmbH as a protective shield around your company, you still have to answer for it yourself. This is not the case with us, the only thing we actually require as collateral is your future sales that you make on the very platforms that you link to us. So let’s say you just make your Amazon Seller account that you link to us, or your PayPal account, then we’d put on it, but there’s just no in rem insurance.
Loans for online retailers - The repayment rates
That’s a good point what you just said with the contributions. Maybe you can explain that again briefly. So the repayment amounts are fixed, as I understand it, maybe you can explain how they are made up?
Yes, so we basically have two models, and the standard model that you’re kind of offered first is actually not a fixed amount but a dynamic repayment. But how does it all work? We sort of put in the application there how much of your future expected sales would go into paying off the loan. We show you this transparently, and this percentage is then defined, so to speak, and then we look at it in the future via your connected channels, how much revenue you have actually made, times the percentage that we have defined for the repayment, and this results in an actual rate. This means that when your sales go up sharply, your repayments go up as well. But if you have somehow weak in the months, so with these trend months, if you make now really from Black Friday to Christmas very approach, then usually you make less in January/February, but there come all the returns. Since you tend to make less revenue, then just your repayment rates would also return. And many dealer customers find that super interesting, because they don’t always have to pay back 10,500 euros at the end of the month, but because it breathes a little bit, so to speak. There’s that option, and then there’s also the traditional way that you just pay back fixed. Means: you just fix with the 3, 6 or 12 months repay. Then it is just simply loan amount by the specified term gives a monthly installment.
What about interest rate hikes?
Okay, so that means you’re giving me as much flexibility as I can get behind that?
Yes, that’s how it is, yes.
Nice! Now we have talked a lot about the fact that it is all flexible. I am also very flexible right now. Does it make sense now to say: I’m going to get a quick loan now just to have money in my pocket in case of doubt, because the interest rate increase will probably also affect you somehow?
Yes, this is a very, very hot topic and in fact it was discussed very strongly even today with us again. The ECB has just announced again today that it will raise the key interest rate and always when the key rate goes up then the overall interest rates in the market go up,. So not only now somehow for the end customer or for the financing banks, but also for players like us, yes. Because of course we also have to get the money from somewhere that we pay out to a dealer, yes. We do it through Bank Partner and there we are usually with flexible interest rates. This means that whenever the ECB decides to increase the key interest rate, the refinancing rate also becomes more expensive for us. To a certain extent, of course, we try to absorb it, but that only works to a certain extent, at some point we have to pass it on to the retailer. A nice feature with us is, it always remains with the interest rates that you get quasi displayed when applying. This means that if you were to take out a loan now, for example, and it said eight and a half percent for 12 months, then it would remain at eight and a half percent even if there were perhaps two or three more ECB key interest rate increases in half a year’s time. So in that sense to answer your original question: from my point of view, yes, makes sense if you can kind of already anticipate a little bit that you’re probably going to need another €20-50-100,000 somehow in the near future. I mean, if you knew exactly then you would make very, very much money with it. No one knows for sure. The markets are in a frenzy about interest rates. No one knows. From that in no case a guarantee from my side. But at the moment it looks very much like it would continue to rise and if you assume plus a financing need has foreseeable, then I think it definitely makes sense to think about it again or at least look at it.
Credits for online merchants - Banxware Interface
Now we’ve been telling you all along how easy it all is and how fast it goes. Stefan, now you have to get on it. Now show us how easy it is to apply for a loan and whether I really don’t need any information that I have to work out.
All right we can do that very gladly Annika. I’ll share my screen for a moment and then we can take a look at what this whole application section looks like in live operation. So the starting point for a merchant is our landing page. Here, the product is simply described again, i.e. all the things that we have now gone through a bit: what is the advantage, how does the process work and how does the repayment work and so on. This is just described here again. Here are also again the points that we also discussed earlier, so I have to have an online store, that’s not even true, but I can also just sell on Amazon for example, but I just have to do business online. I have to have a certain minimum turnover, which is also very manageable, and I have to have been in business for six months. So and then there is just the possibility here to directly apply or start the funding application. There is also the possibility, if I say it interests me in principle, but I have there nevertheless still times the one or other demand, to book also a consultation. Then one of my colleagues or perhaps I will be happy to assist in some way and thenclarify the final questions . But let’s say you really want to get started, yes, let’s take a quick look at that now. The first step in the application is actually these two fields. So you are now here in the input mask and we are now interested in two things. One is: how old is your company? So how long have you actually been active. Can you now select here, say maybe eight months and what are the net monthly sales that your company makes. I’ll just enter something here, 38,000 euros let’s say, and then click on “Next”. Here there is still a voucher option, so sometimes we also do special promotions, where there is then maybe a small discount, you can enter there. So now you have a first initial credit offer. So you have now noticed that you don’t have to give us any documents, you don’t even have to tell us who you are at all, but completely anonymously simply on the basis of these two pieces of information we are already making a first credit offer here. You can see here very transparently that this would be the maximum sum that we can offer you, which would cost you here for a term of twelve months and, as I said, I would like to point out once again that it is the fixed credit fee, regardless of what would happen to the key interest rates in the future, that remains the same, that is the total sum.
How Banxware works
And here you see these monthly sales that would just be used for the repayment. Now let’s say 84,000 is a bit high, you don’t really need that much, but you might also be happy with 35,000 euros and maybe you don’t want to pay it back somehow over twelve months, but over six months. Then you can set this completely flexible, as it suits you. And if you then have the loan offer as you imagine it, then you can go to “apply” here. And now comes the step where we need a little bit of information about you, of course. So you’re going to have to give us some details here, I’m going to fill this in real quick, little moment. Password assigned, one quite fancy. We want to know your date of birth again to make sure you are of legal age. Then you have to tell us here which company form you have addressed me also, both sole proprietorship, as well as e.K, even if you are a freelancer or a freelancer just, or have a GbR, we support just everything. Now say here that it is a limited liability company.
Credits for online merchants - How the credit application works
You must, of course, read and agree to our Terms and Conditions and Privacy Policy. You agree that the information you have provided is correct and you also confirm that you are a legal representative, i.e. that you are the managing director or have power of attorney and may actually conclude a credit application for this company. You then click on “register”, then it takes a little moment, then your account is sort of created with us and now you come to a feature that we’re actually quite proud of, which is a look-up like this where you just have to give a few details about your company.
For example, you only have to enter “Banxware” here and then our system will automatically find the complete company name from the commercial register. This means that we save you from having to provide us with the exact address and that you have to provide your commercial register again. Again, this works for about 95 to 99 percent of the companies. If you can’t find your company directly, then you have the possibility to enter it manually and then enter it manually. So if you are really so very recently started or really a sole proprietor who is not registered in the commercial register and also so not yet known. Then you also have the possibility to enter the data manually. But we’ll use this feature for now. You say that you are from Banxware GmbH, which is located here. You click on continue, so and now comes this point we said earlier. We just ask you to link your online stores and payment providers. And now very important note: the dealer decides for himself which platform he then wants to link with us. So we don’t make any specifications there. Of course, it is advisable to link as many as possible with us, or all those on which you make significant sales, because your sales determine how much credit we can offer. So if you say at the front of the first field that you make 25,000 euros and then link at the back only an account where we see only 20oo, then as I said one of my colleagues would knock on your door and say: either you have a very cyclical business yes and that all kind of runs in November and December, then maybe we just don’t see it, you would have to manually resubmit.
It is best to choose as many platforms as possible
Or maybe you only have eBay linked now, even though you make your main sales through your Shopify store. This means, for example, that you have the option of selecting the platform on which you are on the move and, this is also an important option, you also have a manual upload here. That means if you sell now on a platform, see now maybe here example Etsy is missing here in the list, we have no link automatically. Then you have the possibility to provide us with sales reports manually, so that we can take them into account. Let’s take Amazon Seller Central as an example, just to see how the whole thing works. You click here, you will now be redirected to Amazon to the general login, you must now select once here from Amazon where your store is located, where you sell. Now select “Germany” here and now you already land in your Seller Central, if you would log in normally at Amazon and here you have to give us the authorization that we are allowed to see the data. You just have to confirm this here, then press “confirm” and it will take a moment until the whole thing has loaded and you will end up back in our application field. So, that shows you now here also at the Amazon Seller Central is linked here, it just means it’s linked to us. We’re going to do the manual upload very briefly to show that again how that works, so again the example, if that’s a marketplace Otto for example we also don’t have yet, we don’t have a link. If you want to sell or sell there and just provide us the revenue, then it would be just manual upload off. So and now you have here the possibility to provide us monthly reports manually, that can be in PDF file or a CSV file, we select that here once briefly.
Verification via VideoIdent
As I said, you can basically connect to any platform or tell us which one you are active on, even if we don’t support it natively. This is perhaps particularly helpful for retailers who are active in a few niche areas, as we provide the greatest possible flexibility. So, the first step, i.e. the linking of sales channels, is now done. Now comes the second step, which we had also addressed, namely the linking of the bank account. At this point, we are working with a licensed service provider who ensures that all banks can be connected, because there really are an awful lot of banks in Germany, so we couldn’t program all the links ourselves, and he also has the necessary BaFin license to handle the whole thing. That’s here now, because we’re in the test system right now, test banks are possible here, so I can demonstrate that once as well. So we go on here, you select your bank or you enter there just, I’m with Postbank or Commerzbank or whatever yes, it then enters here your access data, again test system, and here you must then agree again, again that you just transmit the data to us. Click on continue.
Like a real-time transfer, then?
Exactly, the logic is exactly the same as with a real-time transfer or Sofortüberweisungen knows one or the other perhaps also exactly the same logic. You simply dial in with the access data of your online banking, if there are several accounts for the same account, you have the choice which account is the right one. We have also written here above we need the main business account, on which we just also a bank transactions that are relevant to the business erzenen, that you select yes, click on “continue”. It takes a little while for the system to receive all the data from the bank. In the meantime, the gears are turning here, so to speak, and at this moment you are actually already finished. So you now have the opportunity to have the application checked and you are now finished here for the time being. So your funding application has now been submitted for the time being and our colleagues are taking over at this point. Usually, if you do it during normal business hours within 1 to a maximum of four hours will get back to you. In 90% of those cases, that’s a systemic email where it says “Congratulations, your loan application has been granted!”, and then you have to do the final step, is a regulatory requirement, you still have to do a videoident. So we have to identify you once, you probably know that from one or the other app, or if you somehow open an account with an online bank, then you come to a video chat, you have to hold your ID in the camera once. And then the whole thing is really done. As soon as you have completed the loan application, i.e. you have actually gone through the videoident, you will receive the payment from us the next day and that’s it, yes.
Loans for online retailers - Is it really that easy?
It’s so easy that I think you’re cheating pretty quickly.
In fact, so not fraud, but we actually had a case where the dealer somehow called us two days after we had paid out and said: “Well, what is it now? What is the next step, when will it continue?” and then we said: “The money has been in your account for two days and please look at it”, and he was really quite surprised, because he also thought he still had to submit some documents or there are still some steps. So if you click over it a bit quickly, as I did with this demo, then you can almost skip over the fact that you really have to submit the credit application.
Don’t worry, at the latest, if you then really make the loan application binding at the end, then this is already made very clear once again. So you really have to scroll down a PDF contract, confirm it again, I can’t show you that right now, but it will be very clear and usually you don’t go over the whole application as quickly as I did in the demo, but maybe you read through the texts.
Banxware vs. Banxy - What is the difference?
One more thing, because we’ve been talking about Banxy all the time now and it says Banxy here, could you explain what that’s all about?
Yes. It’s a bit of a more complicated story, but I really like doing it. The fact is that we have two business areas, so to speak. The one business area is actually what we’ve been looking at now, so really a direct product where merchants can come to us just to Banxy and make a loan directly to us. And then there is the company Banxware behind it, so Banxy is a brand that directly addresses the retailers, and then there is another brand, namely Banxware as such the company that also operates Banxy, and that also offers a white label solution. Means: we offer the same from the process the same dealer financing, but integrated into platforms. In other words, we are there in the background, offering our solutions for platforms and enabling retailers to obtain revenue-based financing. However, for the trader it looks as if he would get this credit from the platform. And to mention two of our cooperation partners at this point, these are two payment providers. One is Tele Cash, the other is PayOne, as you may have heard, and they have decided to work with us to integrate this solution into their cockpit, into their merchant dashboard, so that they can offer their merchants this service directly. That’s what’s behind it.
Okay, that means Banxware is practically your wholesale platforms product and Banxy is what I deal with when I approach you as a merchant.
Exactly like that, yes.
You are looking for an eCommerce agency?
I think the most common questions should be answered with this in-depth interview. So if you’re looking for a quick, easy and straightforward way to apply for merchandise/personal expense/ or similar loans, keep Banxware in mind. If you need eCommerce and online marketing technical help, you are welcome to make an appointment with us directly.
Do you have questions or need an individual offer? Do not hesitate to contact us.
Haben Sie Fragen oder brauchen ein individuelles Angebot? Zögern Sie nicht, uns zu kontaktieren.
