South Africa’s first online business lender specialising in small to medium enterprises is forging ahead in the financial technology space, boasting 65% repeat business in just 10 months of operations.
Next generation lender, Pollen, is the brainchild Louis du Plessis, who is the CEO of the fintech start-up, backed by Anglo African Group majority owner and chairman, JP du Plessis.
Overseas, the online marketplace where small businesses can secure loans is an enormous industry with tech-orientated companies such as the NYSE-listed OnDeck in the US and Moula in Australia transforming the financial services landscape.
But Pollen is first out of the starting gate in South Africa in a market it estimates is worth over R189-billion. Anglo African, which has been in the SME financing business since 1996, is the backbone of Pollen.
“The interesting thing is that South Africa was way ahead of the global market in terms of online personal loans – think of Wonga and Capitec, for example, and the credit vetting software developed here – but it has lagged behind when it comes to unsecured business loans to the SME market,” says
By the middle of July 2015, Louis had set up the company with Anglo African providing the funding backbone and operational support. The bespoke credit vetting software platform was developed in-house, and adapted and fine-tuned as the company developed.
“We knew the credit risks would be different in South Africa,” Louis says. “We wanted to pilot it for six months, to see average loan size, demand etc. A year later, we’ve done R150m worth of loans.
“Not only that, but 65% of this was repeat business, demonstrating the real demand for our product in the SME business sector.”
“If you loan R100 000, you repay R125 000. There are no fluctuations; nothing changes with interest rates. It doesn’t matter if you’re a big client or a small one, it’s still 25% – this is the internationally accepted norm.”
Anglo African Group chairman, JP du Plessis, says, “Fintech is a growth industry, and the next generation lenders such as Pollen, OnDeck, Moula and others are filling a gap left open by traditional banks, which have operated in the same way forover 40 years.”
“It’s a substantial market,” says Louis, adding that Pollen provides loans to small businesses with an annual turnover of R1 million and over, up to medium size companies with a turnover of R50 million. Pollen business loans ranges from R50 000 to R1 500 000.
South Africa desperately needs entrepreneurs to boost the economy and create jobs. However, they often fail when cash flow is temporarily tight or new equipment is needed to expand and banks are reluctant to secure loans for them, Louis believes.This is why fast, short-term funding is a vital component of success for small and medium business owners.