October closes $300 million in new funds for its SME lending marketplace

French fintech startup October has raised some fresh capital to invest in small and medium companies on its lending platform. Overall, the company has gathered $300 million (€258 million) from various partners that will be deployed over the next few years.

This is not a traditional startup funding round as today’s new investment is specifically designed to finance new loans on its platform. October isn’t selling equity in exchange for capital.

October works with small companies in France, Spain, Italy, Netherlands and Germany that need a credit line. For small and medium companies, you can apply for a loan and get an answer just a few days later. October evaluates risk before handing out loans thanks to industry-specific data analysis and human analysts.

Loans range from €30,000 to €5 million. There’s no personal guarantee and interest rate varies depending on the risk associated with your application.

On the other side of the marketplace, individuals can contribute to SME financing. But the startup has been relying more and more on institutional investors looking for different types of assets to diversify their investment portfolios.

Hence today’s new influx of cash. Here’s the full breakdown:

• $23 million (€20 million) will be used for traditional SME loans with monthly repayments.
• $44 million (€38 million) will be deployed in the tourism industry specifically — hotels, restaurants and more. Six insurance companies and French public sector financial institution CDC are contributing to this fund. Companies applying for loans in this category can delay repayment.
• $232 million (€200 million) will be injected in Italian SMEs in particular. Italian bank Intesa Sanpaolo Group is investing exclusively in this fund. Those government-backed loans will go live quite rapidly as everything will be deployed by the end of 2020.

As you can see, October is becoming an important technological partner for European support plans during the economic crisis. The startup can issue government-backed loans and some public institutions are choosing October to finance SMEs.

Over the past five years, October has handed out around 1,000 loans. It represents $521 million (€448 million) in capital. That number will go up rapidly following today’s announcement.