Small business lending has come a long way with the rise of fintech. Online lenders have filled a gap for small business funding that traditional banks left behind, and small business owners have taken well to the automated process that delivers credit decisions and funding quickly. WishFinance takes it a step further by introducing blockchain technology to the small business lending equation. Their token sale is actually under way now, and they've sold 837,000 tokens compared to a soft and hard cap of 1 million and 5 million tokens, respectively. If they are successful, there could be additional upcoming ICOs tied to the small business lending market.
WishFinance, which is built on the Ethereum network, touts distributed ledger technology, or blockchain, for the inpenetrable way in which data is stored. This, they say, is ideal for credit underwriting decisions in the small- and medium-sized business (SMB) arena. Considering that data on the blockchain can't be altered, WishFinance says lenders will have a clearer and more accurate picture of a business owner's credit profile, which will lead to better underwriting decisions. Funding small businesses on the blockchain will also remove some of the friction tied to relying on third-parties for credit verification services, which is a theme of many upcoming ICOs.
WishFinance Uses Cash Flow & POS for Loan Repayment
Based on the detals that WishFinance has provided, their blockchain-based lending sounds seems to more closely resemble cash advances. They are able to provide almost instantaneous decisions, which is great. They base these decisions on the cash flow of the business, which is common. But they then access point-of-sale transactions for the repayment of the loan. Lenders are repaid by taking approximately 5% from all of the merchant's POS transactions. This differs from a bank loan or even many of the online loans that are available today and is an important distinction for business owners to understand before disclosing their cash flow on the blockchain.