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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
As part of the multiple and painful consequences of the impact of COVID-19 on commercial activity, the lack of liquidity of small and medium-sized companies stands out, which jeopardise the fulfillment of their financial obligations and their ability to develop their operations effectively, including the payment of suppliers, labour and employer responsibilities, payment of taxes and patents and others. It is at this point where factoring is strengthened as an ideal alternative for many businesses with different commercial turns.
In times of pandemic, this becomes a great option for companies that cannot or do not want to undergo a complex and lengthy administrative process to obtain bank loans. And, of course, combining the advantages and benefits of a platform for issuing and receiving electronic invoices with a robust factoring scheme, maximizes the possibilities of growth based on a mostly digital flow and provides a respite in the midst of this complicated health situation. All this, within the framework of the best practices of security and protection of sensitive data.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
Chapter II of the Factoring Act establishes a framework of minimum requirements to be considered when signing a factoring contract, such as the attributions and obligations of the factor and the transferor, the presumption of authenticity of signatures on commercial invoices, and the forms of transmission of invoices and other rights of credit and collection.
Additionally, Chapter III regulates the alternative use of electronic means for procedures for the transmission of credit and collection rights, present and/or future. The concept of "electronic factoring platform" is introduced, which consists of a computer system aimed at automating the assignments of credit rights in favour of factors, through a standardised electronic form. All legal acts that are going to be carried out within this type of platform must be signed by means of a certified digital signature.
Private entities wanting to implement electronic factoring platforms must comply with all the operating specifications contained in Chapter III of the law, relating to the integrity and inalterability of information, storage and custody of information, and duty of confidentiality and probity. In addition, they must obtain authorisation from the Ministry of Science, Technology and Telecommunications (MICITT) so that the platform can operate.
Finally, this law repeals article 984 (e) of the Commercial Code, which provided that actions derived from commercial sales would be time-barred within one (1) year. With this repeal, these types of actions will now have a limitation period of four (4) years instead of one (1) year, and therefore the debts of credit buyers will expire in four (4) years.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, f