South African digital lender Lulalend to launch banking product off the back of $35M Series B

News Summary

  • The Cape Town-based startup uses an online application process and internal credit metrics — a proprietary credit scoring algorithm and a diverse set of alternative data sources — to provide short-term loans to small and medium-sized businesses that are often unable to obtain working capital.
  • The digital lender, which has distributed “hundreds of millions of dollars” in loans, claims its non-performing loan ratio is about 4-5%.“We’ve been able to embed credit solutions utilizing our technology into partners to help them scale, which has also been a large part of our growth,” he said.
  • In most African countries, access to credit remains limited for many small businesses, with the reasons ranging from the inability to pay collateral and lack of credit history to unfavorable lending criteria and high-interest rates.
  • The capital raised will enable Lulalend to increase the size of its loan book, bring new solutions to market and invest in the technology and talent to accelerate the rollout of the company’s new digital business banking platform.
  • In South Africa, where the annual SME credit gap is about $20 billion, according to the International Finance Corporation, fintechs such as Lulalend are pulling their weight by providing varied loans to underserved small and medium-sized businesses.
  • And then to bolster our balance sheet, strengthen our balance sheet; with the $35 million raised, we can raise over $200 million in debt and bring it on our balance sheet to fund our markets,” said the chief executive on Lulalend’s next efforts.
In most African countries, access to credit remains limited for many small businesses, with the reasons ranging from the inability to pay collateral and lack of credit history to unfavorable lending [+5496 chars]