Lending is more than just giving a loan; what happens when you want to do asset financing and you want the loan disbursed directly to the supplier without the risk of diversion? Take for example; An entrepreneur looking to scale their business with new equipment that’s way over their budget. They apply for an asset finance loan and get approved, but instead of this loan directly disbursing to their account, it gets disbursed to the machine seller or in this case a third-party. Less hassle and spurious charges if you ask us.
As simple as this is, it’s quite complicated for many lenders to pull off without tons of calls, orchestration, and a little bit of frustration.
But as usual, Lendsqr’s got its lenders’ backs..
Third-party disbursement allows lenders to disburse loans to third parties on behalf of the borrower. A particularly useful feature for the lender who offers loans that have to be paid to third parties such as educational loans, asset finance, or buy now pay later (BNPL) loans.
How does it work? You ask.
The third-party disbursement can now be configured when you create a new loan product or edit an already-existing loan product on your Lendsqr lender account. Under the “Disburse To” menu you can now enable the third-party option. This feature streamlines your loan disbursement process and eliminates the need for borrowers to manually transfer funds to third-party accounts. It also ensures that the funds are being used for the intended purpose, reducing the risk of misuse AKA money-miss-road or fraud.
To ensure that this process passes muster, when the loans are disbursed, they first get into the borrower’s account on Lendsqr, before they are debited and automatically transferred to the third-party. This creates clear audit trails of how money is moving around.
The third-party can also not claim that they haven’t received the money.
Lastly, this feature is good for lenders who are doing close loop lending. For example, when giving loans for school fees – the borrower can maintain a list of schools (and their accounts) as options. Ensures that only pre-certified third parties are allowed.
You can log into your Lendsqr account and give this feature a spin. Or watch the video explainer to understand better.
