Co-lending in supply chain finance_Yubi Flow

So far, Yubi has offered its two flagship services, Co-Lending and Supply Chain Finance, on Yubi Co.Lend and Yubi Flow, respectively. The two platforms have functioned in silos, with Yubi Co.Lend facilitating smooth and fast disbursal of joint loans based on a co-lending partnership between the originators and the investors. Yubi Flow, on the other hand, has facilitated investors to arrive at terms of financing the supply chains of enterprises easily based on their requirements and enabled quick disbursement.

Wider Scope for Originators to Discover Lenders

With the latest update, the Yubi Flow and the Yubi Co.Lend platforms have been integrated to facilitate interoperability. Originators (a relatively smaller NBFC,  fintech or a HFC) that have a wider reach in tier-2 and tier-3 cities but possibly limited access to capital will now get the opportunity to align with a larger number of investors (a bank or an NBFC) who have better access to capital. 

Originators can discover supply chain financing opportunities on Yubi Flow, while investors can discover SCF deals on Yubi Co.Lend as well.  

Originators and investors will now be able to enter risk and profit-sharing agreements and jointly disbursed loans to finance the invoices of enterprises.

Why integrate Yubi Flow and Yubi Co.Lend?

The move to integrate Yubi Flow and Yubi Co.Lend benefits all the stakeholders involved in the process of supply chain financing. Here’s how:

  • Both NBFCs and banks have successfully leveraged each other’s strengths to co-lend to Small and Medium Enterprises for Loan Against Property and unsecured loans. Bringing both NBFCs and banks to the Yubi Flow platform helps take their offerings a notch above.
  • There is an immense need for the co-lending model to be implemented in the supply chain financing market. Cash-strapped enterprises in smaller towns and cities need more access to the benefits of supply chain financing than to direct credit. 
  • The integrated entity will be the first platform in the country to use co-lending in the supply chain financing space and bring its benefits to the end borrower. NBFCs and banks too have been keen to work with the co-lending model in the supply chain financing market.

 Implementing the co-lending model in supply chain financing on Yubi

Here’s how the development will work out for originators and investors: 

  • The originators will be able to browse through and discover supply chain financing programs, express their interest in a program, and configure their commercials on Yubi Flow.
  • The originator will be able to create a corresponding deal on Yubi Co.Lend under a new sector called SCF Invoicing
  • Investors can express interest in the deal followed by a co-lending agreement between the originator and investor. 
  • Through this integration, we will pass information from Yubi Flow to Yubi Co.Lend through customized APIs
  • The invoices from Yubi Flow are passed to Yubi.Co-Lend as loans under that deal
  • The information related to disbursement and repayment will also flow through these APIs to Yubi Co.Lend to give visibility to the investor
  • While Yubi Flow takes disbursement and repayment end to end, Yubi Co.Lend maintains the split between investors and originators as per agreement. 

 What should originators and investors expect?

The integration of platforms creates a first-of-its-kind and a unique proposition. True to its ethos of opening up the flow of finance to enterprises in India, Yubi’s latest offering will allow combined functionality to originators and investors, giving them the opportunity to not only co-lend, but also co-finance supply chains.

However, Yubi Flow and Yubi Co.Lend will continue to operate individually as well. This will give originators and investors the choice to co-finance, while not making it mandatory to do so.

If the originators and investors do choose to partner to co-finance invoices, this will help originators and investors increase their Gross Transaction Value (GTV) significantly.

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