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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
FinTechs providing loans do not need any type of license if the funds to be lend have not been collected from the public. Hence, if these activities are carried out among individuals or companies with own means, no license is required. If this is the case, the maximum interest rates stated by the Colombian authorities must be respected.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
As mentioned, FinTechs providing loans with own means do not require any license from the Colombian State.
On the other hand, according to Law 1676 of 2013, the minimum condition for factoring in Colombia is to be a company legally organised as a legal entity and to be registered in the Chamber of Commerce.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area
N/A.
Economic conditions
Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area
Currently, there are already more than 630,000 billers in the country receiving more than four million electronic invoices daily, of which 60% are credit invoices and 94% are issued by small and medium-sized companies in the country. In Colombia, this model amounts to only 3% of the GDP; for this reason, the Colombian government has bet on the so-called "social factoring", as a solution to generate liquidity to the country's companies, generating a policy that governs the enabling of the electronic invoice as a value title through Radian.
Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area
Colombia suffered a great blow due to the COVID-19 pandemic, as did most of the countries in the world. In 2020 Decree 1154 was issued regulating electronic invoicing in the country. This has been of great help to the factoring business as it makes it much easier for entrepreneurs to make use of this tool that has been a success for the financing of large, medium, and small companies.