Modalku launches Merchant Cash Advance for underbanked MSMEs

By Digital News Asia June 22, 2017

MSMEs get working capital loans with no required collateral and a swift online process
MCA offers working capital loans of up to US4150,285 for business development

Modalku launches Merchant Cash Advance for underbanked MSMEs

MODALKU, the pioneer of peer-to-peer (P2P) lending financial technology (fintech) startup in Indonesia, is now officially and formally registered at the Financial Services Authority (OJK).

The registration shows that Modalku has gained both government and public trust, along with affirming Modalku’s strong commitment to consumer protection by upholding integrity and compliance to Indonesian law.

The achievement has pushed Modalku to focus on innovation by launching its Merchant Cash Advance (MCA). Promising but underbanked local SMEs and e-commerce merchants will now have access to quality loans, while Modalku lenders gain another alternative investment option.

Modalku co-founder and CEO Reynold Wijaya, Co-Founder says, "The fact that OJK focused on P2P lending regulations in Indonesia shows that the government sees the enormous potential of fintech in supporting financial inclusion.

“MSMEs have always been the backbone of the Indonesian economy, contributing 60.3% of national GDP and 97% of national employment. With solid regulation, underbanked MSMEs will have better access to financing and find it easier to grow their businesses.”

Modalku’s P2P lending business model connects MSME borrowers and lenders through a digital marketplace.

By financing MSME loans, registered lenders gain an alternative investment with attractive returns. Borrowers, meanwhile, get working capital loans with no required collateral and a swift online process.

Modalku is the leading P2P lending fintech platform in Indonesia, with disbursed loans totalling over Rp175 billion (US$13.15 million) into 320 MSME loans.

OJK senior executive researcher Hendrikus Passagi states: "OJK supports and will continue to encourage borrowing and lending activities via P2P lending fintechs as an alternative to national financing products that require no collateral. We view the digital financial ecosystem built by P2P lending fintech platforms as ideal partners to support financial inclusion in Indonesia.

“With official registration at OJK, Indonesian P2P lending platforms are expected to increase borrowing and lending activities at a much larger scale for local MSMEs while still putting customer protection and stability of the Indonesian financial system first.”

Proving their commitment to empowering Indonesian MSMEs and supporting financial inclusion, Modalku has launched its MCA product for underbanked MSMEs and online merchants.

Modalku works together with a payment gateway service to provide flexible short-term MCA loans.

If traditional loan products are repaid through fixed monthly principal and interest, every month a portion of borrower revenue will be collected by the payment gateway service and channelled to Modalku as MCA repayment. The repayment process becomes much easier.

Modalku co-founder and COO Iwan Kurniawan says, “MCA is also benefits Modalku lenders in addition to MSMEs. As both a loan product and an investment alternative, MCA has been proven and successful in many countries such as the United States and China. Modalku is proud to be the first fintech platform in Indonesia that offers MCA.

“MCA’s main selling point for lenders is its lower risk, as every month, a percentage of borrower revenue will be collected and channelled by our payment gateway partner as repayment for lenders.”

Modalku’s MCA product offers working capital loans of up to Rp2 billion (US$150,285) for business development and is now ready for funding from Modalku lenders on its online platform.