logo_mdCanadian shoppers whose merchants have a relationship with FinanceIT don’t need to pay out-of-pocket for purchases.  FinanceIT has built a credit platform that allows a consumer to finance certain purchases at the point of sale, possibly at a better interest rate than their credit cards and definitely with more payment options.

FinanceIT’s clients are vendors who sell vehicles, home renovations, health offerings, or retail products to the consumer.  The business model focuses on making the financing of the product available to the consumer at the point of sale so that there isn’t any excuse not to purchase if the buyer is feeling a little light in the wallet.  The vendor can offer financing deals which delay payment for 3, 6, or 12 months at an interest rate as low as 7.13% — financing which may be much more attractive than credit card financing with a 30-day settlement and/or financing starting at 14 or 15 percent.

It was announced today that FinanceIT just raised $13 million in a Series A round to apply towards their application rollout in the United States.  They are a Toronto-based company that has managed to write $500 million plus in loans with 2,500 vendors since their inception in 2011.

To make the credit process as frictionless as possible the consumer requirements need to be simple and easy to secure.  Clearly, the key driver in any financing/credit business is the consumer’s credit score. The score is the determining factor for the interest rate and any of the other structuring features of the loan, including amortization, payment deferral and length of loan.  Once the credit inputs are determined and approved the vendor can receive payment in one business day.

Ideally, a win/win.  The vendor is pleased to make a sale without retaining the consumer credit risk and the consumer is pleased that they have more financing options for their purchase.  I didn’t notice who retains the credit risk for FinanceIT, but wouldn’t it be great to see them create a two-way peer lending market and they could lay off the credit risk on a peer lender and serve as a matchmaking tech platform?