Bank of America has teamed up with Euler American Credit Company and Amroc Investments to launch an online platform designed to bring capital markets efficiencies to the $6 trillion trade receivables market.
The proposed multi-bank platform - which will offer a set of working capital financing and risk mitigation tools to sellers of goods and services across all industries - is being created with backing from eVolution Global Partners, a venture capital firm that invests in independent, technology-enabled companies leveraging existing corporate assets.
"Today, financial markets segment products by company size. Only large and sophisticated corporations have access to low lending rates through the capital markets," says Steve Shenfeld, senior managing director at Amroc Investments and interim CEO of the new venture. "This business will create new products and provide companies access to highly competitive financing rates, broaden a company's access to capital markets and eventually supply liquidity for a much larger portion of their trade receivables."
The bulk of buyer-supplier transactions remains offline and provides the largest initial opportunity for the new business, he says. However, online B2B transactions are growing rapidly, but are still hindered by limited financing and credit insurance options. Shenfield says the new company will address the needs of this market as well.
"Our small business and middle market clients need liquidity and risk mitigation solutions for online transactions," said Stuart Brister, head of e-commerce for the B2B e-payment initiative at BankofAmerica.com. "This new venture will help support continued growth of business-to-business e-commerce while meeting customer needs for comprehensive online financing and transactions."
The new venture will aim to provide corporations with direct, integrated access to a cross-section of banks, credit insurance companies, and accounts receivable service providers.
The platform will be open, allowing all banks, insurers, and service providers to participate emphasises Tope Lawani, managing director at eVolution. "We believe that in order for this new business to succeed, it must remain independent. Partnering with these industry leaders gives it the opportunity to build critical traction and liquidity," he says.