E-commerce giant eBay forms alliance with Youlend in retail finance sector
Youlend, a British fintech company, is making strides in the German market by partnering with e-commerce platforms to offer pre-approved, revenue-based financing to small and medium-sized enterprises (SMEs). This move comes after a successful program launched in the United Kingdom in 2021, called "Capital for eBay Business Sellers" (CEBS), which provided financing to over 2,700 small businesses and distributed over £25 million in the first months.
Youlend's expansion into Germany allows the company to reach a wider range of businesses, including craftsmen, restaurants, spas, and kiosks. The financing can be accessed through the eBay platform, primarily as growth capital. Youlend has already closed several partnerships in Germany, including with Lexware Office, Mews, and Orderbird.
Unlike traditional banks, which often find it difficult to finance small businesses due to the lengthy and complicated process, Youlend uses AI to calculate an offer based on existing, anonymized sales data. The loan is repaid as a share of the revenue, with a rate between 5% and 19% of the revenue. Youlend takes on the entire balance sheet risk in Germany.
Youlend is also working with the corporate financing platform Fin Compare and already cooperates with Shopify and Amazon in e-commerce. In the UK, Youlend works with JP Morgan, among others, and made £4 billion available for SME financing last year.
The SME financing market in Germany has been challenging and unique in Europe, with many Fintechs struggling. However, Youlend sees great opportunities in the SME market due to the large financing gap that traditional banks often cannot fill.
In comparison, the UK market has historically seen a more mature fintech ecosystem with a wider adoption of alternative SME financing solutions, including revenue-based financing models directly tied to e-commerce revenues. Fintech companies like Liberis have also announced an invoice-based financing offer in Germany.
Regulatory changes in the EU, such as the Instant Payments Regulation, improve real-time payments infrastructure, potentially facilitating more dynamic financing models like revenue-based financing across Europe, including Germany. Fintech companies like Finom in the broader European market provide integrated banking and invoicing solutions for SMEs, pointing to increased digitization and potential for future revenue-based financing partnerships in e-commerce ecosystems across Europe, including Germany.
Instead of interest, there is a fixed fee for the loan, and the money is promised to be in the account quickly, within 24 hours, according to Youlend. Both Liberis and Youlend offer pre-approved loans, with financing already approved at a certain amount and with specific terms before a request is made.
Revenue-based financing (RBF) partnerships between fintechs and e-commerce platforms for SMEs in Germany are currently developing but appear less emphasized compared to Buy Now Pay Later (BNPL) models, which dominate the financing landscape. While the search results do not detail the UK market extensively, it is known from broader industry knowledge that revenue-based financing is more established in the UK and other Anglophone markets where fintech and alternative lending models for SMEs are more advanced and integrated into e-commerce platforms.
In summary, Germany’s fintech-e-commerce SME financing is currently dominated by BNPL and invoice financing partnerships with emerging RBF-like elements mainly through invoice discounting fintechs such as Billie. The UK market generally leads in broader adoption and integration of more direct revenue-based financing models linked to e-commerce platform revenues. The evolving European payments landscape may accelerate greater RBF partnership adoption in Germany in the near future.
- Youlend's expansion into the German market extends their reach to various industries, such as craftsmen, restaurants, spas, and kiosks, offering them pre-approved, revenue-based financing primarily as growth capital.
- Unlike traditional banks, who often find it challenging to finance small businesses, Youlend uses Artificial Intelligence (AI) to calculate offers based on existing sales data, with their financing model repaid as a share of the revenue and a fixed fee for the loan.
