Rabobank offers financing to businesses through high net worth customers

Rabobank is starting a trial in which SMEs can borrow money from high net worth customers of the bank. This offers broader access to financing for businesses and a new investment opportunity for high net worth customers. This form of ‘peer-to-peer lending’ supplements existing forms of financing such as regular bank credit and crowdfunding. Rabobank is building an online platform (Rabo & Co) that brings together businesses and Private Banking customers. Businesses place their financing request on the platform and Private Banking customers state which loan they wish to co-finance. In the trial phase, Rabobank itself will provide at least 50% of every loan.

The trial will end in December. The participants are Private Banking customers with freely investable assets of at least EUR 1 million. The minimum share in the loan to any one business is EUR 100,000. The businesses taking part in the trial are in the growth phase and are seeking financing for expansion or refinancing. Rabobank is the prime contact for the business concerned.
Rien Nagel, member of the Executive Board: ‘The future prospects of this method of lending are good. We expect to see substantial interest from our customers. Businesses are increasingly dependent on alternative forms of financing. The tighter capital requirements for banks are one of the reasons for this. Rabobank aims to provide optimum support for customers with a good business plan in the form of financing. The financing will however to an increasing extent not be drawn in full from our own balance sheet. The private customers that take part in the loan have the same conditions, security and returns as Rabobank and we share the costs pro-rata if a business experiences payment problems. We are in this together.’
Rien Nagel: ‘This form of lending is typical of Rabobank. We were established in the past to link wealthy farmers to farmers needing money. What we are going to do now is similar: the money will now go directly from the high net worth individual to the business in need of funds. Rabobank will still manage the financing as the go-between and main participant, but without fully using its own balance sheet. If the platform is successful, we intend to open it to institutional investors as well.’

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