Trade finance fintech Marco, a U.S.-based startup lending to exporters across Latin America, recently secured a $200 million credit line to grow its financing business in the region.
Based in Miami, the company announced on Feb. 27 it received the credit facility from MidCap Financial and Castlelake. It also took $8.2 million in equity funding from Arcadia Funds LLC.
In a press release, the firm said that fresh funding would support its client base in the U.S. and Latin America as it aims to close a $2 trillion global cap in trade finance. This, the company said, disproportionately impacts small and medium-sized businesses.
In Latin America, a lack of credit is a critical constraint to their growth. Most of these economies have deficient levels of loan penetration. In significant part because of large swaths of the economy operating in informal segments. Bigger-sized corporations typically have access to bank capital. However, middle to low-income individuals and smaller-sized companies usually struggle to secure funding.
Marco looks to address a $350 billion gap
“Fewer than 10% of SMEs in Latin America have access to financing,” the company said in a press release, “despite accounting for 90% of all businesses in the region.” Banks, it argued, “have largely retreated from SME trade lending.”
“Legacy lenders fail to understand SME risk and depend on outdated, lengthy financing processes that stifle the growth of small and mid-sized businesses,” it said. Marco says the estimated financing gap amounts to a staggering $350 billion.
“This is blocking too many exporters from (reaching) global markets,” it noted.
With its product, the company claims, SMEs can get a decision within days instead of weeks. Also, a 24-hour approval turnaround accelerates their ability to participate in the global economy.
“Marco addresses one of today’s most pressing yet under-recognized economic issues. The ongoing inability for small exporters in emerging markets to access capital swiftly,” said co-founder and COO Peter D. Spradling. “We believe that when there’s economic uncertainty is exactly when lenders should help businesses.”
Triple lending in 2023
According to company data, Marco lent $100 million in 2022. It has also financed over $250 million in the past two years. The company aims to reach $750 million by the end of 2023. US and Latam remain the focus. In particular, the regional markets where Marco provides financing include Mexico, Ecuador, Colombia, and Peru. Together, exports amount to $490 billion, it said.