SME financing, without dilution.

Small and medium-sized enterprises often struggle to raise capital. Standard options include raising equity, which is typically what startups do. That dilutes the owners' share of the business, and venture capitalists who invest in startups often want to dictate what the company does, diluting the owner's control of how the business is run.

SMEs can also go to banks and ask for credit, either for short term liquidity enhancement or longer-term use. But this can be complicated and costly. Banks often have stringent requirements, which can make it difficult for companies to get credit at all.

Securitization makes it simple and cost-effective for an SME to issue its own debt, in the form of what we might refer to as a mini-bond.

• No dilution. A way to access capital that does not dilute ownership the way equity financing does.
• Small tranches. Debt issued in sizes that work. A conventional bond usually does not make sense below 100 million dollars or so.
• Terms the company sets. Interest rate, collateral and duration are set by the issuer. Depending on the market at the time of issue, those terms can be more favourable than what the company would otherwise receive. It also lets the SME attract investors by offering a higher rate of interest.
• Backed by company assets. Notes can be secured against the company's assets, which reduces risk and makes them more attractive to investors.

For investors, these products open fixed-income opportunities with low correlation to other asset classes. Investors willing to conduct their own risk assessment and due diligence can reach quality SME credit that banks have overlooked, and because each product is tailored to the individual situation of the SME, each one is bespoke.