Singapore-based invoice financing marketplace Incomlend announced that it has teamed up with European alternative asset manager Fasanara Capital to launch a $60-million alternative financing programme for SMEs focused on environment, social, and governance (ESG).
Incomlend ESG Financing Programme, which is Asia’s first ESG-focused structured finance initiative, seeks to back SMEs by providing them access to working capital as they positively impact their communities.
The programme allows SMEs that meet the ESG criteria and pass the financial assessment process to monetise invoices with a quick turnaround of as early as three days after product shipment.
Incomlend said it will be assessing the SMEs ESG plan by using established international standards, such as the United Nations (UN) Principles on Business and Human Rights, the UN Sustainable Development Goals, and the Paris Agreement.
Incomlend CEO and co-founder Morgan Terigi said the the joint alternative financing programme with Fasanara Capital will enable ESG-focused SMEs to grow their business and profitability.
“We believe that ESG is not a hindrance but an accelerator of SMEs’ growth, and more needs to be done to aid ESG-focused SMEs,” he said.
The new initiative is Asia’s first ESG-focused structured finance programme. According to the Global Sustainable Investment Alliance, sustainable investment in the US, Canada, Australasia, and Europe has increased by 15% from 2018 to 2020, reaching $35.3 trillion in value. It comprises more than one-third of all assets under management.
Incomlend operates an invoice trading platform, which connects exporters and importers with investors. Exporters are paid early for supplied goods and services, while importers get to extend payment terms.
Investors, on the other hand, gain access to a new alternative asset class by participating in this exchange.
The firm aims to bridge the $1.5-trillion trade finance gap, brought about by a credit crunch faced by many cross-border trading companies around the world.
According to 2019 report by ADB, over 40% of trade finance applications by SMEs are rejected by banks. This financing gap continues to widen with the rise of compliance costs due to Basel I and II regulations.
In August 2020, the startup raised $20 million in its Series A round led by Sequoia India.