Florence Finance is an RWA protocol focused on connecting the real-world with DeFi. By lending to SMEs (small & medium sized enterprises) we are able to provide a safe and stable yield onchain to crypto users.
Lending to SMEs through platforms like Florence Finance carries inherent risks, as with any investment. However, the risk is somewhat quantifiable; the average default rate for SMEs in Europe stands at approximately 2% per year. Should a default occur, it's notable that the average recovery rate of defaults is about 75%, which can provide some reassurance to lenders. This suggests that while the risk of default exists, the potential for partial recovery of funds is relatively high. Nonetheless, lenders should consider these statistics within the broader context of their investment portfolio and risk tolerance.