Limited access to working capital is one of the biggest obstacles to the growth of SMEs.
Many fintech companies and small and medium-sized companies lack the capital and resources to compete.
To counter this problem, many companies create dedicated credit arrangements, as each arrangement requires additional expenses and additional management, making it a slow, cumbersome and ultimately ineffective process.
Many cryptocurrency projects have intervened to solve this problem by providing advance access to capital for each market through a simple single credit arrangement that simplifies access to financial solutions that accelerate business performance and volume.
Among the companies seeking to solve this problem is Ripple, which announced today, Friday, the introduction of lending products in the digital currency XRP.
Ripple disclosed its line of credit and lending to customers using its Liquidity on Demand (ODL) service.
A spokesperson for Ripple confirmed to the source:
"This is the first time we have tried a product offering in the lending space, we may decide to create a more robust offering in the future."
According to Ripple, the line of credit that provides lending services will enable small to medium businesses to expand their businesses and solve the problem of stalled growth, which hinders their ability to compete with larger companies.
Those companies using ODL services on RippleNet, a network of payment providers, will be able to purchase XRP coins from Ripple on credit and will be charged a fee on the borrowed amount.
The service is designed to facilitate low-cost financing of cross-border payments compared to traditional means, and has been tested by RippleNet clients through a pilot program, according to the company in its announced statement.
XRP is used for demand liquidity as a "bridge currency" to facilitate cross-border payments.
And we give the following example to make the picture clearer:
A commercial company in Saudi Arabia, which needs to pay money to a supplier in Egypt, but cannot find a foreign exchange dealer who wants to exchange the Saudi riyal with the Egyptian pound currency, can resort to transferring money to XRP and converting it quickly.
This commercial company in Saudi Arabia can close the deposited amount in Ripple, unless the commercial transaction is completed and payment is made in a timely manner.
Ripple has 6.2 billion XRP (worth about $ 1.55 billion at the current rate of the currency).
While its stock represents 6% of the total supply of XRP coins when counting 45 billion in circulation and 48.6 billion in collateral.
The company periodically sells XRP coins into the market to boost its business and develop its products.
It is worth noting that the founder of Ripple recently indicated that the ODL service does not affect the price of the XRP coin
Nice Thanks
For info