The opportunity: Acknowledging the slow and complex traditional lending processes, Defacto set out to provide a faster, simpler, and more accessible business financing solution.
The solution: By leveraging Swan’s API, Defacto ensures that funds remain secure within its ecosystem while also establishing powerful payment rules to build a comprehensive, all-in-one lending platform.
The impact: Combining Defacto’s product with Swan’s API enables almost instant fund disbursement, real-time payments, and automated repayment flows for their customers.
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For small and medium-sized businesses (SMBs), accessing fast, flexible financing is often critical for covering operational expenses, managing cash flow, or seizing growth opportunities. Yet, the traditional lending landscape remains slow, fragmented, and overly complex.
In 2021, Defacto launched its Lending-as-a-Service platform to disrupt this status quo. By combining leading technology with a deep understanding of SMB needs, Defacto empowers European businesses with near-instant access to working capital.
Since its launch, Defacto has delivered over 800M€ in loans, enabling thousands of SMBs to secure finance in under 30 seconds. And, in 2023, the company took its commitment to fulfill the lending needs of businesses as seamlessly and as fast as possible even further. How? By optimizing their payment orchestration with Swan’s API. Morgan O’hana, Co-Founder of Defacto, shares;
”A customer comes to Defacto, makes a loan request, and then we need to initiate the payment. One of our big questions was how will we allow customers to do payments on the platform. Swan came out to be the best partner we could ask for for this point in the lending journey.”
Embedded finance in an embedded lending platform
Traditional SMB financing often involves cumbersome processes—from lengthy approvals to delays in fund disbursement. Defacto saw an opportunity to break these barriers by optimizing their payment processes through Swan’s API.
Imagine having a business account directly built into an accounting tool. This makes managing your finances much easier by bringing banking and accounting together in one place. It reduces manual work, minimizes errors, and simplifies daily tasks.
Now, picture this: businesses can request loans directly from that same tool, speeding up the process of getting the funds they need. The money is deposited into the same account, and they can even use a linked card to spend it, pay suppliers, and have everything automatically reconciled. When it's time to repay the loan, the repayments are automatically debited from the same account, making it smooth and hassle-free. As Morgan O’hana, Co-Founder of Defacto, explains;
“Through our banking partners and our core offering, businesses can now access financing through their web banking. It’s a key selling point. It makes it so convenient for customers.”
So, how does it work?
Already leveraging advanced credit-scoring algorithms and automation workflows to streamline loan approvals, Defacto partnered with Swan to improve funds distribution. Morgan O’hana, Co-Founder of Defacto, explains;
“We have a main account with Swan, that’s stores our funds. Then, when a customer makes a loan request, we ping Swan and they initiate the payment in a matter of seconds. Therefore, for a customer, it’s just a matter of seconds from the loan request to the money in their bank account.”
With Swan’s APIs, Defacto now benefits from an embedded account, meaning they hold a single master account with Swan where lending funds are stored. The API also allows Defacto to automate the approved loan transfer process, initiating instant SEPA payments directly to the recipient’s account within minutes, based on the business logic integrated into the system. Storing funds in a Swan account within the Defacto ecosystem not only reduces waiting times but also offers greater flexibility and efficiency compared to traditional banking methods, thanks to Swan’s advanced API capabilities.
“Something that Defacto and Swan share is that we’re both an API-first solution. We designed all our processes and our product as API-first. This allows for best-in-class integrations, from the full offering or smaller parts for customers to test the business case.”
Finding a reliable banking partner
Operating in a highly regulated industry, Defacto sought a partner that could handle the complexities of compliance and banking operations. Swan proved to be the ideal choice, offering:
- Regulatory expertise: Swan has an e-money license and is regulated by ACPR, meaning Defacto can be confident that its high regulatory standards will be met by Swan’s dedicated compliance framework and team.
- Reliable infrastructure: Swan built its own core banking system and ledger from the ground up. This technology tracks balances, transactions, and flows with the level of control and precision that companies like Defacto need to adapt to a fast-moving environment.
- Earning opportunities: With Swan’s revenue-sharing model, Defacto can generate income from funds held in their Swan company account and more.
And it’s just the beginning
With embedded credit set to account for 25% of European SMB loans by 2030, this new era of business financing is just beginning. Thanks to Swan’s APIs, Defacto is establishing the new standard for speed and simplicity in lending. And as they continue to innovate, Swan is proud to support them in delivering instant access to capital so European businesses can grow without the traditional headaches of financing.
