Capify, a New York-based global alternative financing company, has landed a partnership with e-commerce giant Alibaba to provide cash advances and loans to small and mid-sized businesses in Australia.
The partnership allows Capify to provide funding to Australian businesses seeking to make significant purchases from Chinese businesses operating on Alibaba's online platform. In providing anywhere between $5,000 and $1 million to merchants, Capify pays the Chinese business on Alibaba and gets repayment from the Australian business.
The partnership, which launches this week, gives Capify momentum it can use to attract independent sales organizations and other partners looking to expand globally through a one-stop shop, said Capify CEO David Goldin.
"We built out this global network and we are open to the possibilities of additional reseller partners and ISOs in the countries we are in," Goldin said.
That could be music to the ears of ISOs that are always looking to expand business into global markets, said industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.
"The ones that do it right are the ones who expand along a trajectory that is natural for them," Ablowitz said. "There is a lack of 'one-stop shopping' for partners around the world, and at the same time there is a huge and growing need for capital for small businesses."
Those two factors "seem to be an interesting intersection" for Capify to address in seeking business clients and ISO partners, Ablowitz said.
Capify, which has an office in Manchester, established a similar partnership with PayPal in the U.K. in 2012, and has been the preferred financing provider for Vantiv in the U.S., Goldin said.
"We have partnered with a lot of large merchant acquirers in each market," Goldin added.
None of those partnerships loom quite as large as the Alibaba opportunity, simply based on the Chinese e-commerce giant's scale.
"This is absolutely one of our bigger partnerships, and not just for Australia," Goldin said. "Because of Alibaba's global platforms, it helps us because we are seeking other global partnerships."
Capify offers small businesses cash advances that are paid back over time, with interest, through a percentage of the merchant's credit and debit card sales. It also offers a straight business loan based on overall gross sales with a fixed micro daily repayment schedule.
Restaurants, which accept many payments through cards, would likely opt for the cash advance, while a doctor's office doing $100,000 in monthly business, but only $10,000 through card co-payments, would find the straight business loan a better option, Goldin said.
Capify rebranded this month after operating under the titles of five companies founded by Goldin in four countries United Kapital and Capiota out of the U.K.; AmeriMerchant out of the U.S.; AUSvance from Australia and True North Capital of Canada.
Combined as Capify, the company now claims to be the first to offer alternative financing to small and mid-size merchants across those four countries.
Many of those businesses were established separately to keep competitors at bay while Goldin plotted a strategy to build a global network and obtain experience in underwriting in different countries, he said.
Still, there is no lack of competitors providing alternative funding to small and mid-sized merchants, many of them with capabilities to consider a more international approach.
In a similar lending scheme for cash advances, Square Inc. developed Square Capital to provide advances to small merchants who pay back the loan through a percentage of sales accepted through the Square card reader. However, it serves the Square merchant rather than businesses seeking to make purchases from those merchants.
CAN Capital operates as an alternative funding provider in the U.S., allowing payments industry partners to offer merchant clients cash advances.
Also, PayPal expanded its Working Capital program early in 2014, providing loans to merchants who use PayPal accounts to accept payments and speeding up the lending process based on transaction history.
More creative programs are likely on the horizon, especially those attached to partners with connections in the retail and payments industries.
Merchants are increasingly in need of those cash advances or straight business loans partially because of "the dearth of capital being made available by banks," Ablowitz said.