South African businesses have been through trying times during Covid-19 as fintech Fundrr attests. Demand for funding increased and clients’ ability to pay decreased during the first hard lockdown. But, the fintech attracted an investor and in the past year, Fundrr grew its book by over 500%, and disbursed 316% more monthly than the previous year.
The digital-only business quadrupled its team, continues to hire and is on track to disburse R100 million in funding to SMEs in the coming year. The immediate service, transparency and ease of applying has translated into an 80% retention rate of Fundrr clients – four in five businesses return for additional loans.
Idan Jaan, CEO and co-founder of Fundrr, says: “Even prior to the pandemic, one of the biggest challenges for small businesses has been accessing funding. Banks prefer not to underwrite small businesses. The amount of paperwork and long turnaround times exclude most small businesses from accessing the working capital they need. This became even more pronounced during the lockdowns as businesses were also not generally able to access government grants.”
Fundrr provides one of the quickest turnarounds on business funding applications in the market. The application and onboarding are completed online via a portal in under eight minutes and responses are provided within 24 hours.
It offers loans for South African businesses in any industry that have at least a six-month track record, with a minimum revenue of R 30 000 per month.
Funding is typically used to buy stock, open new stores, purchase equipment, undertake renovations or expand the business.
Fundrr repositioned in March this year to focus on millennial business owners – the first SME lender to do so. “This generation of business owners are the driving force in the South African economy yet there are no other funders targeting them directly,” says Jaan. “We want to be the preferred brand for when they need funding to grow their business. We changed our website, language and use the communication channels they prefer.”
Fundrr uses technology and real-time data to score the businesses that apply for funding. In this way, it creates a more complete picture of a small business and its growth possibilities. These various data inputs produce a Fundrr Score, and fast loans are provided ranging from R20 000 to R5-million.
The repayment of the funding facility is mostly tied to the business’s cash flow patterns. In this way, Fundrr is able to provide a repayment frequency that will not be an added burden. By using risk-based pricing, lower-risk businesses can expect to pay lower rates.