Liberis’ unique small business card-sales model set for European growth

Since its formation in 2007, Liberis has provided over 15,000 small businesses with more than £450 million in funding, the majority of which came through its innovative Funding-as-a-Service platform. The business has expanded through a strategic-partnerships model, including four of the world’s largest payments acquirers such as Worldpay and Nets, which also service small business customers and who white-label Liberis’ financial product for them.

Over the last 18 months, Liberis has expanded into five new countries, including the UK, US, Sweden, Czech Republic, Slovakia and Finland. At the same time staff levels have grown from 70 to 150.

To augment its international growth, Liberis appointed general managers for both the US and Europe in 2019. Howard Kramen, who previously was head of credit operations at PayPal, was tasked with covering the US, whilst Pedram Tadayon (pictured) was appointed general manager of Europe from his previous position as Tieto’s vice-president of financial services.

The FTV Capital funding is the first institutional equity fundraise by Liberis, which provides finance to small businesses against their future debit and credit card sales. The raise takes the total debt and equity raised by the fintech to over £150 million.

Bespoke finance models

In 2016, Liberis secured backing from British Business Bank and the following year it became a founding member of the Association of Alternative Business Finance, an organisation formed, alongside six other alternative business finance providers, to promote best industry practice and responsibility in its field.

Over the past couple of years, Liberis has also funded a number of applications through Open Banking and launched Risk Based Pricing, which enables every merchant to get a bespoke finance offer.

The business model which differentiates the company is its ability to offer funding to small businesses with payments linked to credit and debit card transactions. Amounts funded range from £2,500 to £300,000 and Tadayon confirmed that over 70% of credit decisions are made instantly with the remainder completed within 24 hours.

He told Asset Finance International: “The customer only pays us when their customers pay them. We take an agreed split percentage of the credit and debit card takings while the merchant takes the sale minus the split amount.”

The really innovative parts of the Liberis operation is the ability to assess potential clients’ credit risks by examining transaction flows, dispute history and open banking searches. In addition, its advanced collection mechanism is such that payment is geared to fluctuations in the client’s cash flow – a slowdown in credit and debit card sales will mean the client pays less until trade picks up.

Tadayon said: “The fact that we facilitate finance to card-taking businesses, which is a high growth market, enables us to rapidly expand worldwide through the globally-accepted Visa and Mastercard brands and means that we can grow rapidly worldwide. In the next 18 months we plan to further expand operations in Europe.”