Online financial services providers like Klarna and Affirm saw their value drop over the past year. But the business model remains attractive to venture investors, who are now putting their money on E-commerce financers that lend to small businesses rather than consumers.

Buy-now-pay-later players offer quick loans to online shoppers and recoup their money over time while charging a small fee to the merchant.

Similar business models like Wayflyer do the same, only with companies that use the money to buy stock for their online stores and pay back when goods are sold.

The startup, valued at $1.6 billion in February, might typically lend $400,000 for six months at a 4%-5% fee.

According to Reuters, it funds the loans by tapping credit lines provided by banks like JPMorgan and Credit Suisse.

Many investors see incredible growth potential here since they have poured $2 billion of equity funding into pay-later companies that serve businesses in 2022, according to Dealroom.

Big names like Citigroup and HSBC have giant trade-finance divisions specially established for financing companies’ supply chains.

For the likes of Wayflyer, the argument is that they can serve companies more quickly and reach smaller borrowers that the big banks don’t.

The market for small business-to-business payments is valued at $700 billion in Europe alone, so there’s a big slice of the pie to fight for.

Nevertheless, managing credit risk is a challenge, something that digital trade-finance Greensill Capital and U.S. company Pipe can confirm through their recent challenges.

The structure of loans adds another problem to the mix since repayments can be sized in proportion to the borrower’s revenue.

This means the lender takes its money back more slowly and that could be an obstacle if the business is struggling.

Remains to be seen if Wayflyer’s default rate in the first nine months of the year, at just 1% of total loans, is comfortable enough for more business.