The Syme model explained29 Dec 2020 15:04
For those that still don’t fully understand the Syme model. It is about providing immediate working capital to companies.
It is a very simple model where Syme are the middle man between the borrower and the funder.
Syme employs risk assessors who have a strict criteria when performing due diligence on the company. They do not take on companies with a bad credit history. Syme receives an upfront fee of 2% (non returnable) if the company passes the due diligence process the funder then lends money to the company based on the valuation of their stock.
The funder then owns the inventory, this is known as a true sale, but the company keeps the stock in their warehouse and can still sell the stock. The company has to pay back the funder over a 3 year period this includes a rolling 3 year interest.
Syme also takes an annual 2% net fee (3% if done through the captive Bank) costs are small to Syme.
The money that the company is lent does not show as debt on the balance sheet as it’s not a loan because the funder has actually purchased the inventory, if this was done through a bank, it would show as debt on the balance sheet, as the money is borrowed based on assets, the bank would never own them (unlike the Syme model)
The funders loan actually strengthens the company balance sheet. And gives them more liquidity. This in turn would give them a better credit rating.
All inventory that is funded is recorded and monetised on the blockchain through SIA a payment services tech firm which uses a fintech platform to optimise the firms working capital.
SIA monetise the assets by tracking their movement and always make sure assets are there for the funder as collateral.
The company can repay the funder in full before the 3yr contract is up, or it can roll it over past the 3yr term dependant on further due diligence.
Company X gets funds upfront for working capital based on its inventory, which it can in turn sell even though the funder owns them.
As long as company X keeps payments up and repays borrowed funds within the 3yr time frame, it works for everyone.
The Funders get a good return on lending their money for a three year period.
The unique benefit of the Syme model is there is no risk for Syme. If for any reason Company X goes bankrupt, Syme has already been paid upfront and are not liable for any losses the funder has received X amount plus still owns the inventory which can be sold.
With the model being Sharia law compliant this opens up another untapped market. The Syme model is an international scalable market place for all.
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