Stellar Community Fund

By BorderDollar

BorderDollar - Invoice Finance

SCF #29

$95.0K

Legacy v5.0 Community Award

Awarded

BorderDollar provides investors with opportunities to invest in real-world assets through SME cross-border trade invoice financing

Products & Services

BorderDollar provides investors with opportunities to invest in real-world assets through SME cross-border trade invoice financing. The trade finance gap is $2.5T worldwide, and we are focusing on the maritime industry in SEA which represents a $500B gap with annual growth of 9.6% (https://www.adb.org/publications/2023-trade-finance-gaps-growth).

These SMEs are underserved by the traditional financial institutions, experience tight cashflow, and inefficiencies in the supply chain. These SMEs face tight cashflow problems because they have short-term needs for the money, but customers will only pay them after anywhere between 30-90 days. With invoice financing / freight factoring, these SMEs get upfront funding thus freeing them for important things such as paying their employees on time, rent, etc.

The BorderDollar platform involves two stakeholders: investors, and businesses.

Investor-facing platform: Investors refer to individuals who want to finance invoices in exchange for a certain amount of returns, i.e. between 8-14% APR. Here on the investor-facing side, investors connect their wallets, choose a liquidity pool/campaign to fund, and how much they want to fund. Our value proposition to investors is that they are investing in an underserved, neglected, and most importantly orthogonal to regular assets. We appeal to non-degens who wish to make a difference for underbanked SMEs and prefer stable regularly timed returns over staking-type projects with short-lived high returns.

Business-facing platform: SMEs which require cash will upload their invoices, and we will assess these invoices internally before putting them up for funding by funders. On this end of the platform, businesses undergo KYC. They will then receive 70-80% of their invoices' value in fiat using an off-ramp service. For example, when we onboard SMEs from the Philippines, we can use Moneygram for money transfers from the liquidity pool to fiat because of their collaboration with Circle and Stellar (https://www.moneygram.com/intl/stellarwallets).

These invoices will initially be assessed manually through SME owner interviews and due diligence, along with our risk scorecard. In the future, we will integrate machine learning for automated risk assessments for scalability.

For more technical information, please refer to the technical architecture document below.