Karma: A Timely Blockchain Solution for Small and Medium Enterprises (SMEs)

Karma: A Timely Blockchain Solution for Small and Medium Enterprises (SMEs)


Setting up a business is the dream of thousand millions of people across the globe regardless of the region or country. That’s why small and medium enterprises (SME) lie in the foundation of the global economy, with more than half of the overall world population working in such companies.

This dream may become closer if a beginning entrepreneur can get a loan. Unfortunately, not everyone gets approval. According to the data, the rejection rate is estimated at $4.5 trillion annually for the SME sector around the world. Almost 30% of SME companies shut down in the first three years of operation due to lack of funding.

In recent years, the peer-to-peer (P2P) lending system emerged as an alternative to the banks. And this segment is growing, exceeding $188 billion in China alone, in the course of 2014-2017.

With the blockchain technology going mainstream, the P2P lending for SME companies gets an opportunity to benefit from DLT – thanks to the entry of Karma company to the market.

Simply put, Karma is a true P2P platform which is fully decentralized. Based on the blockchain technology, it enables user to invest in any SME. The beauty of the ecosystem is that there are no third parties involved which brings down the cost of transactions.

More than Just an Investment Outfit

One of the features that make Karma stand out of the crowd is its ability to let investors lend to SMEs anywhere around the world. By design, the platform is a unique enabler that gives SMEs access to additional liquidity.

The outfit is ideal for entrepreneurs with limited access to funding, and this is set to work very well in countries where borrowers are faced with high-interest rates. The ecosystem comes in handy in countries with developing economies as well as those with “weak currencies” thus creating a huge investment opportunity.

The platform offers its users a wide spectrum of investment opportunities and the choices range between being an investor, guarantor, borrower, seller, collector, scoring agent, investment fund manager or insurer.

Karma Journey in the Market

Karma has been around for some time and has been growing since the completion of a successful ICO in 2017. The global peer-to-peer ecosystem my.karma.red was launched at the beginning of 2018. Since its launch date, the project hit the ground running.

The project success is based on its global outlook and anyone is free to participate. At press time, borrowers and investors are free to take part in the platform’s deals and trades.

How Does Karma Work?

To participate in the Karma network one needs to perform a simple registration process that opens up a new world of resources.  Upon registration, one is accredited. If you are the borrower, for instance, to apply for a loan you need to agree to the deal conditions which include the tot amount requests, repayment period and the interest rate.

As an additional security procedure, you might be required to give additional information which might include business details and type, personal details as well as collateral resources if and when applicable. However, there is a lot of flexibility depending on the business type and amount requested.

Request Processing on the Karma Platform

The request processing is stringent add straightforward on the platform and passes through moderators and scoring agents. This adds a touch of transparency in the request processing and borrowers are graded through a scoring system as well as rated on risks depending on their portfolio and profile.

The scoring system is however, this is no guarantee on the investor return. The final decision is vested on the investor. This only plays a role in making the right decision on how much one stake. Once the request is approved, it is floated in the market place and available to any registered user on the Karma ecosystem.

Investing Through the Kama Platform

Once one registers on the platform and passes the accreditation process, they can invest on any available request. However, the lowest investment is $80. The beauty of the system is that investors can connect their accounts with inbuilt virtual accounts.

The system is designed such that fund requests stay in the marketplace for a maximum of 24 days. Once the requested funds are collected, the deal is closed automatically and subsequently sets the deal terms depending on the amounts involved, calculates the interest rates, and repayment schedule is set. Finally, the funds move to the requester account.

On repaying loans, the system notifies the borrower to deposit fund in their virtual account as per the scheduled date and once done, the funds are moved to the investor account seamlessly. The system captures the transaction history and timely repayments are a huge plus when it comes to future loans.

Karma Targeted Client Base

The Karma project is self-sustaining and the core target clients include the investor and borrower. Participants are being carefully selected will emphasis on businesses that are already in the market and are looking for expansion funds. However, anyone can join as an investor, and the only requirement at the moment is to have a Russian bank account.

Interestingly, the Karma project participation has no restrictions; anyone with basic to advanced investing experience is accommodated. More importantly those keen on adopting new investment instruments are welcome. All you need is a bank account and a functional internet.

What’s more, the interface is user-friendly and navigating through is fuss-free. The developer team has also included mobile application offering and anyone with a compatible smartphone can invest on the go.

Why Karma Project is in High Demand

Since the platform hit the market, it has become a one-stop-shop for a wide range of users; it is a major boost for SMEs that are keen on attracting additional liquidity. In dozens of emerging economies SMEs are faced with a lot of resistance in accessing loans from banking and other lending institutions, and Karma is a godsend.

There is no bureaucracy with the Karma platform and has fewer regulations and the systems are optimized and efficient. On the other hand, Karma offers the next generation flexibility that any investor looks for. On top of it all, it is an enabler to a faster access to funding.

As an investor, you stand to reap the benefit of earning returns. You are also covered from any market risks because of the diversification the system. Funds are distributed and this lowers the risks that the investor might be exposed to.

Karma Milestones to Date

The platform might be new in the market and might take a while for the SMEs and investors to discover the hidden gem but the user-friendliness and virtual account are two on-demand features that stand out.

The system is fully automated, and there are no weak points for manipulation since it rides on the immutable blockchain technology. The user base is still virgin and the introduction of the mobile application is set to make the ecosystem a huge hit and SMEs’ haven.

Since its launch in 2018, the outfit has closed a noticeable number of deals, and investors are already happy with their returns. The system trust from the user has seen zero borrower defaulters. The project aims at mass adoption for both borrowers and investors from Russia and beyond to dominate the global market.

Karma project future is poised to continue brightening up; it hit the ground running and since last year, it has been connecting the international users and continues to expand globally. Getting access to the platform is super easy and you can chat the team up through their telegram channel, or check the official website my.karma.red.