Access to credit is very important for a business. But as an owner of micro, small, and medium enterprises (MSMEs) in Nigeria, it is quite challenging to find the necessary funding you need to grow.
Traditional banks that are the go-to places for business loans do not readily provide credit facilities to small businesses. The reason for this is because MSMEs do not have the necessary assets to serve as collateral or well audited account books to confirm financial records.
According to reports, only about 20% of bank loans in Sub-Saharan Africa go to the SMEs and in Nigeria this number is less than 1%.
This is why most small businesses go for the less formal options like the popular LAPO Microfinance Bank who tend to offer loans but at huge interest rates. And this credit gap estimated at $30 billion is hindering lots of potential businesses.
But thanks to the rise of online credit providers, one Nigerian startup is focused on SMEs. Meet Lidya.
Founded in 2016 by Ercin Eksin and Tunde Kehinde, the Lagos-based startup provides small business owners access to a working capital they can use to expand their business operations. And similar to the model run by other online loan providers, Lidya uses credit-scoring smart algorithms and technology to predict a customer’s creditworthiness.
These algorithms provides a unique credit score for each user, and it is based on this score that Lidya gives loans ranging from $150 to $50,000 to a business.
This is what makes Lidya a better option to banks which require cars, landed properties and other assets to provide businesses with credit facilities.
And according to a local reviewer on Google, Lidya loans are secured at an interest rate of 3.5%.
Another edge Lidya provides is that it processes and disburses loans to users within 48 hours, with repayment schedules agreed.]
Beyond loans, Lydia also works as a kind of digital partner for SMEs. The platform offers a digital account to users where they can create a database of their various customers. Users can also create an invoice with their company’s profile and send to their listed customers digitally, while managing their cash flows, customer data and tracking their payments.
Users can upload their bank account or transaction information as well as apply for a Lidya Smart Card.
Since it’s launch, Lidya has disbursed over 2,000 business loans to running MSMEs in farming, hospitality, logistics, retail, real estate, technology, and health. The startup has also raised $8.2 million, with the latest being a $6.9 million Series A round led by Omidya Network last year.
This funding according to it will be used to expand its loan book, scale across Nigeria and Africa, while growing its team.
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