Small businesses are the heart of many industries and economies across the world.
Despite this fact, research suggests that many small businesses (particularly those in emerging markets) don’t have access to credit and even if they do, it’s under-served.
It doesn’t take an expert to figure out that there is a gap in small business financing that needs to be solved urgently. In terms of numbers, small businesses easily make up for more than half of a country’s GDP in many parts of the world.
Yet, small businesses are suffering from not having proper options which eventually bleeds into the economy.
This gap happens due to inefficiencies in financial institutions and small businesses themselves. Banks are obviously going to be more selective in giving financing options to businesses due to the risky nature of the finance industry.
At the same time, processes in banks are so outdated and inflexible to the point where banks cannot afford to offer personalized solutions to each customer because they will actually lose money.
Small businesses also contribute to this problem by not having the skills or organization in the finance department, with many businesses being run solo or by a few people at most without a specialized department to take care of finances.
Financial management is not a strong aspect of many businesses and this does nothing but add pressure to an already worrying issue.
All of these problems have led to a solid growth in the alternative financing industry.
It works exactly how it sounds; alternative financing is the process of acquiring financing options and services through non-institutionalized entities (like banks).
One of the more popular examples of alternative financing is through micro-loan platforms where loans are issued by individuals or businesses instead to consumers of banks.
The World Bank estimates that the alternative financing industry could be worth $90 billion in as little as 2 years from now which proves the rising popularity of alternative financing solutions.
The Debitum Network is a platform that aims to decentralize the financing process by uniting borrowers, lenders, risk assessors, insurers, and all parties related to the credit and financing industry in one user-intuitive platform.
Debitum is supported by the Ethereum blockchain with the core of its logic being powered by smart contracts, essentially pieces of code that execute automatically according to the agreed terms without the need for an intermediary.
The Debitum Network will act as a decentralized ecosystem for parties from across the world to participate in every step of the financing process, hence improving efficiency and reducing costs.
Instead of just providing financing options, Debitum also provides opportunities for business in the financing industry to enter the global market without issues.
The goal of the Debitum platform is to provide unparalleled access to the SME capital market which was not possible before due to outdated systems in the financing industry; with Debitum Network, investing in SMEs is no longer a task to scratch heads about.
The platform is further boosted thanks to a development collaboration between Debifo, an alternative financing platform with a multi-million dollar asset portfolio, and Inntec, one of the most reputable IT solutions company in Northern Europe.
The Debitum Network is extremely easy to use for first-time users (the process will be explained in detail later in this article); users don’t have to worry about messing up as processes are mere clicks away from being completed.
Debitum utilizes the DEB token (Debitum’s official utility token) as a medium for borrowers or investors to access services on the platform such as risk assessments, buying insurance, and even debt collection.
The Debitum team understands that trust is essential in all financing process which is why a trust rating system is integrated into the platform.
All transactions in the platform are connected to smart contracts that affect a party’s trust rating depending on the outcome.
In the case of a positive experience (such as successfully providing services according to the agreed terms), the system will automatically add points to the trust rating system while the opposite happens for each negative outcome.
This maintains a healthy ecosystem for users as low-quality parties are naturally avoided and removed from the community thanks to the rating system.
To prevent service providers from providing less than satisfactory services at the start, they are required to freeze a certain amount of tokens as a guarantee to provide quality service to the platform’s users.
Fiat currencies are used in Debitum’s transactions which means that businesses can actually use the platform’s services from day one. Of course, digital assets are not neglected as the Debitum team utilizes a hybrid approach for the platform’s liquidity pool.
This hybrid approach allows the smooth integration of fiat-crypto infrastructures which ensures that as the adoption of cryptocurrencies increase, the Debitum Network will be able to adapt and offer its services in both fiat and cryptocurrencies seamlessly.
The financing process of Debitum was carefully built to ensure all parties are rewarded in a fair, transparent, and effective transaction system.
Before borrowing, first-time users are pre-qualified by the platform to ensure compliance and that their loan requests are genuine. After the verification process, borrowers will issue a loan application where they can choose the type of asset to receive from investors.
The asset is then checked to see if it corresponds to the loan application while risk assessors play their part in the application by double-checking the loan application, the available collateral, as well as giving suggestions on the financial aspects of the loan.
To prevent investors from losing their money, Debitum has an integrated insurance system (depending on the type of loan) which can be used to protect future investors from loan defaults as well as ensuring the loan is partially or fully paid in worst-case scenarios.
After all of this is done, investors then have the choice to fund one or more loans with the information available to them (such as the trust rating system mentioned earlier).
Investors who’ve invested in loans can use the secondary market to liquidate their investments easily.
In the secondary market, investors can sell their current loan investments to interested investors; the rights of sold loans are then transferred automatically to the new investors with smart contracts.
Debitum’s ecosystem encourages the full payment of loans but in the case that a loan is not repaid on time or violates the loan agreements, the debt collection process in Debitum will cover the losses of the investor.
Insurance holders are compensated immediately while the platform’s debt collection team moves ahead in recovering the loans from the borrower.
After the financing process, the trust rating system is updated automatically by smart contracts and this goes on until a healthy ecosystem is built within Debitum.
The Debitum token (DEB) is the official utility token of the Debitum Network.
Here are the details of the DEB token sale:
Token name: DEB
Token base: Ethereum (ERC-223 compliant)
Token supply: 400,000,000
Token sale duration: 7th December, 2017 – 21st December 2017 (Round A) | 25th January, 2018 – 25th February, 2018 (Round B)
Token sale target: 50,000 ETH (hard cap)
Token exchange rate: 1 ETH = 2,888-3,750 DEB (depending on the period of token sale)