October
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Crowd-lending platform October hits pause on loan repayments
French startup October wants to reduce the pressure on small and medium companies going through the coronavirus crisis. In order to give them some headroom, companies that have borrowed money on October won’t have to pay back their loans for the next three months.
October works with small companies in France, Spain, Italy, Netherlands and Germany that need a credit line. One of the company’s key advantages compared to borrowing money from a bank is that it’s much faster. You can apply to a credit line and get an answer just a few days later. Usually, companies pay back their loans over time, with monthly repayments over three months to seven years.
October evaluates risk before handing out loans. It works with many institutional partners to raise funds and deploy capital in those loans. Some retail customers also invest on October directly on a company-by-company basis.
But many small European companies that have borrowed money on October won’t generate revenue for a little while. They could face cash flow issues and they could have issues repaying those loans.
That’s why October has decided with its institutional partners that it is postponing all outstanding loans for the next three months. Companies won’t have to pay a huge sum of money after that; October is also postponing the end date of the loans by three months.
October then asked retail investors to vote whether they are in favor or against postponing loans; 99.42% of retail investors who voted followed October’s move.
October is also waving its own fees for the next three months, but companies will still have to pay interest on outstanding capital.
This way, fewer companies should go bankrupt over the next three months. It should minimize the impact of the current economic crisis on the overall default rate of October loans.
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October lets 11 public companies borrow money on its platform
French crowd-lending platform October (formerly known as Lendix), wants to educate more people about new ways to borrow money. That’s why the company is launching a project called Grandir Ensemble (grow together).
11 big companies are borrowing €100,000 each on October at a 2.5 percent interest rate. October users will be able to lend as little as €20 to one of these companies.
If you look at the list of companies, all those names will sound familiar to French readers and beyond. Most of them are public companies, most of them are originally from France — AccorHotels, Adecco Group, Allianz France, Arkéa, Edenred, Engie, Iliad, JCDecaux, Suez, Unibail-Rodamco-Westfield and Webhelp.
According to October, annual revenue of those companies ranges from €1.8 billion to €122 billion, with Allianz generating more revenue than anyone else.
At a press conference, October co-founder and CEO Olivier Goy explained the idea behind this project. Those credit lines won’t change anything for big public companies. But many of those companies work with small and medium companies.
Today’s partners will be able to refer small companies. October will wave the application fees for those companies up to €11 million in loans.
Thanks to this vote of confidence, you could imagine small companies applying to October because a big company they trust has done it before.
France’s Economy Minister Bruno Le Maire recorded a video message for the press conference, saying that he supports October and today’s campaign.
One of October’s key advantages compared to borrowing money from the bank is that it’s much faster. You can apply to a credit line and get an answer just a few days later. This is quite useful if you need to move quickly to launch a new product, open a new office and more.
October currently operates in France, Spain, Italy and soon the Netherlands. I already covered the company in depth back in June if you want to read more.
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