New company makes standard on microlending in PHL
THURSDAY, 24 MAY 2012 20:28 JUN VALLECERA / REPORTER
A GROUP of investors from California's Silicon Valley has invested $8
million, more or less P350 million in local currency, in a homegrown
company engaged in micro lending.
The money finances the lending activities of Lenddo Philippines, a
start-up company that harnesses the power of internet-savvy Filipinos as
financial consumer.
As lender, Lenddo extends loans as low as P5,000 up to P45,000 to anyone
with a job, has online access and whose character make-up is such that
others in a network can vouch for his capacity to pay.
Because everything in online and the default rate mirrors that posted by
bricks-and-mortar micro lenders, Lenddo is able to pass on these cost
savings in the form of very low interest rates on its loans.
According to Richard Eldridge, Lenddo co-founder and its chief executive
officer, loans typically costs 0.99 percent up to 2.49 percent a month.
The typical neighborhood loan shark dishes out loans costing five to
seven percent a month by comparison, Eldridge said.
Because these are in essence micro loans, terms mature in one, three,
six months and up to one year.
Eldridge said nine-month loans are typical and may be drawn for
educational, medical and home-repair purposes.
A typical borrower is an employee with a monthly income of more or less
P25,000 and with a network of friends, co-workers and family whose
individual credit score affects everyone in the network.
The Lenddo lending model is based on network, in which one asks to be
admitted to an online group of members whose behavior as borrower
impacts the credit score of everyone in the group.
A borrower who slips up and forgets to pay on time immediately lowers
the credit score of everyone in the group and this acts as a social
lever for the borrower to pay up at once.
Eldridge said his investors include Accel Partners, Blumberg Capital,
Omidyar Network, the Montreal-based iNovia, and New York-based
Metamorphic Ventures.
Also forming part of his fund source are David Kidder of Clickable.com,
Scott Heiferman of MeetUp and Barry Silbert of SecondMarket.
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CARLOS ANI - International Microfinance Consultant - SEEDFINANCE Corporation Chairman
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