Marco Financial has secured $26 million in funding and credit to helps SMEs in Latin America export goods to the U.S. and other global markets.
Global trade is expected to hit a new high of $25 trillion by 2027, according to Boston Consulting Group, growing at a CAGR of 3.3%. Marco’s initial focus on Mexico, Uruguay, Chile, Colombia and Peru.
SMEs are growth drivers of international trade, accounting for 60% of total employment in advanced economies and 80% in developing countries, including those in Latin America. Yet these exporters face massive financial hurdles due to long payment cycles.
The gap between when goods are shipped by the exporter and when the buyer submits payment can last 2-4 months – an impossibly long wait for SME exporters who often lack the capital to maintain operations while waiting for payment.
Banks, traditionally the primary providers of trade finance to address these challenges, reject up to 50% of SME financing applicants and largely retreated from SME trade lending in the tighter regulatory climate following the 2008 financial crisis, according to Macro Financial. This has created a $350 billion trade finance gap that blocks many exporters from the U.S. market.
Marco addresses this financing gap by providing financing to Latin American SME exporters selling to U.S. buyers. The platform shortens the loan origination timeline from more than two months to one-two weeks. and provides funding to approved exporters within 24 hours.
“Access to trade finance is one of the greatest hurdles in business operations. The traditional system, dominated by banks, simply is not working anymore. It disproportionately hurts SMEs, restricts economic mobility and stifles job creation in emerging markets,” said Peter D. Spradling, COO and co-founder of Marco.
“Marco has assembled a world-class team to tackle the multi-trillion dollar trade finance market in a post-COVID time when SMEs around the world need, more than ever, reliable capital to fund operations and growth. We are excited to be part of Marco’s journey to support the suppliers that are the backbone of global trade,” said Yida Gao, partner at Struck Capital.
“For smaller businesses in Latin America, accessing trade finance to export their goods is a major concern and a top reason why many don’t succeed,” said Javier Urrutia, Director of Foreign Investments at PROCOLOMBIA, an organisation that promotes foreign investment and non-traditional exports in Colombia.
“In Colombia alone, a 1% increase in exporter productivity in our textile industry would result in 500,000 new jobs for the country.”