Beehive, the UAE online marketplace for peer-to-peer (P2P) finance, has launched an invoice financing product aimed at SMEs in the region.

“The new Invoice Finance solution helps SME businesses boost their working capital and improve cash flow, by unlocking the value of their accounts receivable to ease the dual challenges of rising inflation and late payments,” says a statement issued by the company.

The new service supplements Beehive’s existing Business Finance product which was launched in the UAE in November last year.

GTR caught up with Paul Boots, Beehive’s chief operating officer, at GTR Mena Trade Finance Week in Dubai. According to Boots, take-up of the original Business Finance product has been “incredible”: 10 business loans have been fully funded since the launch. “Deal number 11 was up on the platform yesterday and that’s already 40% full,” he says.

Multiple investors have also signed up to the platform, which essentially provides SMEs access to finance through crowdfunding: a relatively new concept in the UAE.

Boots explains to GTR that the SME business in the region has traditionally been underserved by banks: Beehive provides these companies with the opportunity of connecting directly with individual investors in a cost-effective way.

“What we are doing is creating a lot of efficiency with regards to time to finance, but also huge cost savings. What’s more, as much as SMEs need finance, there is also a strong demand from investors to find alternative ways to make a good return,” he says.

Beehive’s Business Finance online marketplace (the first in the UAE) facilitates funding for businesses seeking investment between Dh100,000 and Dh500,000. Individual investors can invest from as little as Dh100 and bid to lend money, choosing how much they will lend and at what interest rate. Beehive then facilitates the loan agreement between the business and investors, charging a small percentage fee of the loan amount. The business receives funding typically in around seven days and investors receive monthly repayments at target rates of between 8% and 20%.

The new Invoice Finance product will help SMEs manage their cash flow by closing the gap between the moment a business issues an invoice and when it receives the actual payment.

Businesses will be able to list invoices that are due within 60 to 120 days and receive financing within 24 to 48 hours at rates starting from 0.75% per month.

“The request was there for larger facilities as well,” says Boots. “The product is targeted at the more sophisticated and high net-worth investor. It still allows investors to diversify – but to do that with larger chunks of money.”

“Everyone is very excited about the upcoming business finance opportunities we still have in the pipeline. I believe that, with the launch of our new invoice financing solution, larger investors such as funds and asset managers will soon realise that our platform is a great substitute for generating alternative returns, while supporting SMEs in the UAE economy,” says Craig Moore, founder and CEO of Beehive.

Beehive is licensed by the Dubai Multi-Commodities Centre (DMCC) – Boots’ ex-employer. “They have worked with us to create a regulatory environment that protects the investor money and ensures the continuation of contracts, and so on. We do that to a high level. We have studied the regulation that came into place in the UK and, with whatever tools we have in the UAE, we fully comply with that. From a regulation point of view, it is something that is still coming: it’s an emerging industry.”

The company implements stringent screening processes of all businesses that wish to sign up to the platform so as not to expose investors to risks that they would not be comfortable with.

Boots tells GTR that the plan is for the business to expand throughout the MENA region.