Fintech Modalku Received Funding to Help MSME Affected by Corona
Modalku’s financial financing technology (fintech lending) startup got a funding commitment from the US $ 40 million series C or around IDR 625 billion. It is planned that some of these fresh funds will be used to restructure micro, small and medium enterprises (MSME) loans that are affected by the corona pandemic.
“This funding will support MSMEs to continue to grow, especially in the current crisis (coronavirus pandemic) as it is today,” Modalku Co-Founder & CEO, Reynold Wijaya said in a press release on Thursday (4/23).
Because it is in the form of commitment, investors who will be involved in the investment cannot be delivered yet. However, the company revealed that previous investors participated in this funding round, and some were new.
Modalku has won US $ 25 million in series B funding from SoftBank Ventures, Sequoia, Alpha JWC Ventures, and Golden Gate Ventures in 2018. The company also obtained funding in the form of debt (debt funding) from investors based in the Netherlands, Triodos Microfinance Fund, and Triodos Fair Share Fund at the end of last year.
Credit Restructuring Is Conducted to Help Corona Affected MSMEs
Reynold said that the condition of the Covid-19 pandemic caused several MSME business sectors to be hit. Likewise with MSMEs who are borrowers (borrowers) in Modalku. Therefore, the company wants to help MSMEs by restructuring credit in Modalku.
There are two approaches to lending relief, namely proactive and collaborative. The form of relaxation facilitated by Modalku is the adjustment of the loan limit and the extension of the tenor. Modalku will adjust the restructuring on a case-by-case basis.
Reynold said retail traders who are also included in the loan portfolio in Modalku became a business sector that was quite devastated by the coronavirus pandemic. But to date, less than 1% of active borrowers in Modalku have applied for credit relief.
Modalku Co-Founder and COO Iwan Kurniawan said the loan portfolio was still quite good. This is reflected in the Non-Performing Loan (NPL) rate in Indonesia of only 0.8%.
“The level of Modalku NPL in Indonesia can still be controlled because there are still business sectors that can grow and need funding,” Iwan said. In addition to helping MSMEs affected by the Covid-19 pandemic, Modalku will use the fresh funds to expand markets in Southeast Asia.
Modalku Has Conducted Risk Mitigation due to Pandemic Impacts
Peer to peer (P2P) lending technology companies, Modalku applies several responsible lending principles as a risk mitigation measure from the impact of the coronavirus (Covid-19). Modalku’s Co-Founder & CEO, Reynold Wijaya, said this principle was the principle of Modalku’s operation in assessing MSME borrowers and their financial ability to repay loans.
“We have been monitoring the development of the Covid-19 virus since January 2020. The current economic dynamics are affecting the business conditions of MSMEs in certain sectors that are borrowers in Modalku,” Reynold said in an official statement on Tuesday (3/31/2020).
The steps that will be applied in the next few years, namely, conducting a more comprehensive selection process, adjusting the limit and the term of the loan, and maximizing collaboration with e-commerce platforms where most of the sellers enter the micro-segment.
The Company Will Focus On Helping MSMEs
Reynold said the business growth strategy during the Covid-19 outbreak was very focused on Micro, Small and Medium Enterprises (MSMEs) and their networks. “We are discussing to find the best solution in supporting the continuity of MSME business development in Indonesia,” Reynold said.
This Series C funding also supports Modalku to continue to innovate in enhancing the user experience and benefits of Modalku users, both in terms of borrowers and lenders.
As a step to increase trust especially in these conditions, Modalku actively communicates the adjustments made to loans funded by certain lenders.