Constructing a Link Between Sustainability Investors and Small and Medium-Sized Enterprises

This experiment was done in the past, before sustainability was embraced by as many people as it is today. People were initially sceptical about its purpose, seeing as it didn't fit into a traditional category; it couldn't be labelled as banking, capital markets, etc. This occurrence signalled the beginning of a new category, which was created to classify this unusual product. Rather than focusing on other people's reactions, the founders of the experiment chose to make the most of it and craft a compelling narrative. Now, this FinTech has spread beyond the place it was first established, helping it to find its place in the wider world. This trial endeavors to form a green connection between capital focused on sustainability and MSMEs, allowing sustainability-related concessionary and philanthropic capital to access MSMEs. lack of finance access, constraints in supply chain, and inefficient payment systems. The FinTech's research suggests that the Asian MSMEs are looking at an USD $110b sustainability financing gap. This gap can be traced back to a lack of financial access, weak supply chains, and inefficient payment systems. FinTech believed that leveraging on Last Mile Lenders (LMLs) is the key to constructing a green bridge facilitating the efficient flow of concessionary and philanthropic capital directed towards institutional sustainability. Given the wide-ranging, assorted, and geographically distributed nature of MSMEs across different nations, it is unfeasible for any one entity to effectively create sustainability-related loan opportunities on a large scale. These LMLs, however, have crafted a specialized presence within their relevant geographic area and have the capacity to cultivate a pool of potential borrowers who are creditworthy, as well as the ability to monitor the loans. The only thing preventing them from obtaining more affordable capital are the limitations of their leverage--providing a modest portion of their own capital while borrowing the remaining sum from commercial banks and other non-banking financial institutions in order to finance the MSMEs' borrowers. The FinTech thought that if they could standardize the process of assigning, tracking and recovering institutional sustainability-oriented philanthropic and concessional capital given to these LMLs, they could create a channel for these LMLs to contribute to the furtherance of the sustainability cause. The FinTech sought to create a digital platform with the ambition of (1) doing due diligence and enlisting LMLs in Asia, (2) giving LMLs the opportunity to advertise their pooled capital requests and point out the sustainability-related objectives that the money will be devoted to, (3) facilitating institutional concessionary capital providers and philanthropic capital distributors to look into the LMLs in greater detail, (4) providing a regular flux of reports and a streamlined procedure to recover the money lent at the end of the loan. If the experiment is successful, it would mark a breakthrough in connecting LMLs to the ecosystem of concessional and philanthropic capital for institutional sustainability, providing the means to deliver capital directly to MSMEs that are most in need.

Source: https://medium.com/@notherArmchairEconomist/building-a-green-bridge-to-connect-sustainability-capital-to-msmes-47d89ddb61cc?source=rss------fintech-5