Introduction
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Introduction
Florence Finance is a means of giving funders direct SME credit exposure without any liquidity guarantee, not dissimilar to peer-to-peer lending. The innovation lies in the fractionalization and the grouping of underlying loan exposure to allow for a portfolio approach to investing, thus mitigating concentrated credit risk whilst facilitating liquidity through secondary trading of the tokens that represent underlying funding commitments.
The Florence Finance platform will comprise various Loan Vaults, which provide access to underlying portfolios of SME loans (collateral) with some common denominator, whether the originator, geographic origin, or risk/reward parameters.
Initially, Florence Finance will have two Loan Vaults:
Firstly, the “Caple” Loan Vault will comprise loans originated by our partner Caple with whom we have launched a novel, ESG-compliant, short-term (<12m) working-capital-focused loan product.
The second “Junior” Loan Vault will be focused on funding smaller amounts of junior funding to launching borrowers, starting with SwishFund in the Netherlands.
At the outset, these Loan Vaults will be limited in size and likely concentrate on the riskier end of the credit spectrum (i.e., junior/subordinated/2nd lien lending). This roll-out phase primarily aims to build the required infrastructure (payments, controls, admin, accounting, legal & compliance) and test it before we scale further.
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