Retail Lender
Category: Entrepreneurs By : Ian Williams Read : 214 Date : Wednesday, August 02, 2017 - 10:31:30

Ahmad Zamroni / Forbes Indonesia

Abraham Viktor would like to democratize Indonesia’s lending practices. “The image of loans in Indonesia is that it’s something for the elite,” says Abraham, 24, co-founder of fintech site Taralite. “For decades we’ve had banks that are very exclusive. What we’re trying to do is make our financial products accessible. We use language that is easy to understand and we distribute it in the most viral way possible—online.”

Taralite makes loans to online merchants, the SMEs selling over sites such as Tokopedia and Lazada (merchants on those two sites make up 40% of its borrowers). These small businesses online find it hard to get funds from regular banks, which mostly lend to larger corporate clients. In this vacuum, Abraham would like to develop Taralite. (Some 1% of Taralite’s loans go to individuals).

Tokopedia was the first site to work with Taralite, but only after Tokopedia tried a lending scheme with a traditional bank. “It did a trial for two months, and in that two months the approval rate by the bank was only 0.5%,” Abraham says. “The bank would reject them because the client doesn’t have a physical store to visit. It’s an online business, so of course there is no physical store.” With Taralite, the approval rate is 33%, according to Abraham.

Taralite can lend anywhere from Rp 1 million to Rp 2 billion, up to a maximum of one year—the average sum lent is Rp 40 million, according to Abraham. As one testimonial says on the Taralite site for an unidentified Tokopedia seller: “I am very satisfied with the service of Taralite and highly recommend Taralite to any online merchants who want to expand their businesses.” Taralite charges around 1% a month for its loan.

Taralite takes its own cut with a provision fee of 1%, plus 0.5% to 5% from the lender. Although Abraham won’t discuss figures, he does say Taralite will be profitable by year-end. Taralite gets its leads from a referral system generated by the sites themselves. Money for the loans comes from Tifa Finance, a small listed lender, and also from individuals.

To qualify applicants, the site has a sophisticated algorithm that captures more than 150 variables, including earning power (applicants must submit a slew of information). If approved, Taralite emails the client the loan contract. Abraham declined to disclose the average number of monthly loans, but he did say that Taralite has issued loans numbering in “single-digit thousands.” Taralite claims NPLs of less than 0.1%, down from 0.9% at the start of 2016.

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