Business loan

Business loan that allows you to borrow with Bitcoin

If your business has cryptocurrency in its investment portfolio, here’s some news that might interest you: Australian lender FiFit has launched a business loan that allows businesses to secure funding against their Bitcoin.

The move comes in response to Australia’s growing interest in crypto and is moving away from the standard secured business loan where a tangible asset (like equipment or property) would typically be required as collateral.

FiFit Director Jack Martin said that with the commoditization of crypto ownership – and in particular Bitcoin, there is also a greater need for lending facilities that will accept this form of asset as collateral.

“As the demand for the digital asset grows, so do the surrounding financial platforms such as FiFit. FiFit gives cryptocurrency holders the ability to liquidate their productive asset without selling it, ”he says.

In fact, recent research from the Independent Reserve digital asset exchange revealed that nearly one in five Australians now owns a cryptocurrency, with the most popular choice being Bitcoin.

So how does FiFit work and what are the costs involved? We will take a look.

How does FitFit work?

Like any other commercial lender, FiFit will only provide financing for business purposes, whether that is buying stocks or covering personnel costs. You can borrow between $ 500 and $ 50,000, depending on your needs and the amount of Bitcoin you have.

What are the interest rates and fees?

FiFit has kept it simple on this front. There are two main costs involved: an interest rate of 7% and a setup fee of 2%.

Will my Bitcoin be safe?

To minimize the risk of being hacked, your Bitcoin will be hidden in a cold wallet for the duration of your loan.

For context, cold wallets are digital wallets located on an offline platform, so they are protected against unauthorized access, cyber attacks or other vulnerabilities associated with connecting to the internet.

What happens if the value of my crypto changes?

If you’ve been following the news, you may have noticed that the cryptocurrency market can fluctuate quite drastically. In mid-May, for example, the price of Bitcoin fell more than 7% after Tesla CEO Elon Musk tweeted that his company would halt Bitcoin purchases due to environmental concerns. So how would this volatility affect your business loan with FiFit?

Bitcoin price movements would impact your loan-to-value ratio (LVR). This refers to the value of your asset relative to your loan, so if you have $ 100,000 of Bitcoin as collateral and you borrow $ 50,000, your LVR would be 50%. If your Bitcoin value then drops to $ 90,000 for the same loan amount, then your LVR would rise to around 55%.

On the one hand, any increase in Bitcoin’s value would allow you to access more funding if you need it.

But on the other hand, if your LVR exceeds the agreed cap due to a drop in Bitcoin value, then FiFit will notify your business in real time that this has happened. You would then have 24 hours to lower your LVR. There are two ways to do this: either provide additional security or refund the amount owed.

“If this remedy is not enforced or if the account progresses to the specified maximum LVR (whichever comes first), FiFit will use the Bitcoin to settle the account and return all excess Bitcoin to the company,” said Martin. .

How do I register?

To be eligible, you must have an active ABN and Bitcoin asset to pledge as collateral. If you meet these conditions, here are your next steps:

  • Apply online. It should only take a few minutes. You will need to provide information about your business and specify the amount you want to borrow.
  • FiFit will perform know your customer and anti-money laundering checks.
  • Once these verifications are completed, you will receive a secure address for the cryptographic transfer. Remember that only Bitcoins are accepted.
  • After you have transferred your collateral, you will receive immediate approval based on the live crypto price.
  • Expect the funds to arrive in your bank account fairly quickly. This can happen within an hour, although the exact time varies from bank to bank.
  • Make refunds via electronic funds transfers or cash deposits.

Wondering how FiFit compares to other commercial lenders in the market? Head over to our Business Loan Comparison Center to get started today!


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *