France-based fintech Defacto has filed an application for a European credit institution licence with the ACPR and the ECB, laying the groundwork for an expansion across the continent starting in 2027. The company, which provides working capital financing to small and medium-sized enterprises, said the filing follows five years of commercial, technological, and financial development, during which it has approached breakeven.
Growth and lending activity since 2021
Since its founding in 2021, Defacto has built a credit infrastructure spanning direct origination and embedded finance within B2B software platforms. The company offers six financing products designed to cover a range of working capital needs. To date, Defacto has financed more than 20,000 SMEs for a cumulative total exceeding EUR 1.5 billion, with over 90% of that activity concentrated in France. The company has also already provided financing to SMEs in Germany.
Defacto addresses a financing gap it describes as structural: outstanding working capital requirement financing needs are estimated at around EUR 800 billion in France and EUR 3.2 trillion across Europe, with traditional banks meeting less than half of that demand. The company attributes this shortfall to high operational costs and limited access to real-time business data among incumbent lenders.
Technology and licensing as core infrastructure
Defacto has developed a proprietary creditworthiness assessment model based on data and artificial intelligence, maintaining a small team weighted towards data engineering and development. The company said this approach delivers cost efficiency more than four times that of traditional banks.
The company operates under a banking model covering the full lending chain, from origination to recovery, rather than partnering with asset managers or banks for origination. Defacto is currently licensed as a specialised finance company (société de financement) by the ACPR, a status the company said is closely aligned with the credit institution licence now under application.
Expansion plans for Germany and Belgium
Subject to regulatory approval, Defacto intends to enter the German and Belgian markets, which it identifies as structurally comparable to France in terms of B2B payment terms, factoring market size, and electronic invoicing adoption. The company plans to replicate its existing distribution model abroad, combining direct sales to SMEs, referral partnerships with accountants and fractional CFO firms, and embedded financing through Defacto Connect, its infrastructure for fintechs, B2B platforms, and financial institutions.
A company official described the banking licence as a condition for growth rather than a constraint, noting that artificial intelligence supports the company's credit model and scoring but does not substitute for regulatory compliance or risk management infrastructure built over time. Another company official said the ACPR and ECB filing represents a significant milestone in extending the company's model beyond France on both a technological and prudential basis.
