Amartha Obtains 1,4 Trillion Rupiah Credit Facility for MSME Capital

Startups Amartha announced the acquisition of a credit facility (loan channeling) from an institution providing capital from San Francisco, Community Investment Management (CIM), worth $100 million (more than 1,4 trillion Rupiah). The funds will be channeled again by Amartha as productive capital for MSMEs in Indonesia.

In an official statement, CIM chose Amartha as its partner because it has the same values ​​in presenting inclusive financial services based on sustainability principles. CIM acts as an investor social impacts, which is committed to complying with the European Sustainable Finance Disclosure Regulation (SFDR), namely regulations that apply in Europe for the provision of sustainable financial services.

CFO Amartha Ramdhan Anggakaradibrata said, "[..] Amartha and CIM share the same values ​​that see technology and the provision of inclusive financial services can create sustainable equitable prosperity for the grassroots economy. It is hoped that this collaboration can move other institutions, to join with Amartha in advancing Indonesian MSMEs through access to finance."

Head of Emerging Market Strategy CIM Bernhard Eikenberg added, this collaboration marks an important milestone for CIM's progress in Southeast Asia. He believes that MSMEs are the backbone for various economic sectors and are the segment that experiences the biggest gaps in the financial sector.

"CIM's partnership with Amartha will foster an ecosystem of responsible and transparent products that promote financial inclusion and improve the financial health of people in Indonesia," he said.

He explained that cumulatively, Amartha has channeled capital worth more than IDR 12 trillion to more than 1,6 million MSMEs in Indonesia. Also claimed, has been making profits since the last three years.

Ramdhan explained, the company applies principles ethical lending in carrying out business operations, namely ensuring that every service for MSME partners is carried out with good ethics and transparency. This principle is the reason for CIM appointing Amartha because CIM complies with the Social Loan Principles regulations which prioritize the integrity and transparency of financial services.

CIM is not the first partner to provide credit facilities to Amartha. Previously, the company had also collaborated with Lendable and the International Finance Corporation (IFC). Lendable disbursed $50 million in loans to February 2021, while IFC awarded $25 million to March 2023.

Credit loans in Indonesia

Lendable has provided loan facilities to fintech startups in Indonesia several times, such as KoinWorks and EXPERIENCE. Apart from Lendable, there are several other institutions that also provide similar funds for fintech lending in Indonesia, for example Accial Capital for Pintek, Awan Tunai, and Investree. In addition, there are GMO Payment Gateway (Investree), Partners for Growth (Kredivo), and others.

Actually, there are two schemes that are widely applied to channel funds from institutions, viz loan channeling and venture debt. The first scheme is intended for institutions such as banks to channel credit funds to MSMEs through fintech lending. Many local banks have started to announce their entry into the fintech startup ecosystem through this collaboration.

Meanwhile, venture debt In fact, it is more strategic in nature, such as to finance operations and growth, generally come in tandem with equity funding from venture capitalists. However, not a few use the funds provided to be distributed again.