Alibaba Group Holding Ltd (NYSE:BABA) announced that in association with two British lending firms, it will provide financing to U.K. firms that are willing to purchase from suppliers on Alibaba.com. It is first such deal of Alibaba in Europe. The company established its first center in London in 2009.
Alibaba said the startup companies can get lines of credit up to $180,000 for up to 15 months to purchase from suppliers on Alibaba.com, with prices starting at 0.75% a month. The company finalized same arrangement with Club Corp, a firm in the U.S. in last month. The U.S. firm connects lenders and borrowers whereas the British companies, Ezbob and Iwoca, lend directly. There are plans to make more such financing deals in some other countries.
The local market
Alibaba intends to use locally based lenders as they are well acquainted with the metrics of market. There is no need to arrange financing directly through the company. Alibaba has been working on the deals from past one year. As it has strongly extended its operations in China, now it wants to explore other markets. It is still unknown firm on the international platform. The products like financing services will help it to reach potential customers.
The other highlights
Alibaba Group Holding Ltd (NYSE:BABA) said that it would make money by charging a fee to the supplier for selling products on its online platform. The higher membership fees include suppliers training, data analysis tools and better placement on the website. The British companies said that they provide funds to small sized businesses faster than banks. They offer short-term loans to businesses in minutes or hours, against the days or weeks time taken by traditional banks to approve applications. They assess whether the business is creditworthy by processing data like customer feedback on their sites, past credit history, current bank account balances and tax records.