Modalku: Increase Economic Growth and Social Impact of MSMEs with Fintech Peer-to-Peer Lending

Peer-to-peer (P2P) Lending is a new breakthrough in the field of financial innovation to make various transactions or loans easily and practically. Fintech (P2P) Lending connects Micro, Small and Medium Enterprises (MSMEs) with lenders (individuals and institutions). There is service fintech P2P lending This property owned by Modalku can certainly be profitable for the MSME business segment. 

Based on research conducted by Modalku and DSInnovate, the great influence of P2P Lending in Indonesia itself can also be proven by the many MSMEs who tend to choose to obtain business capital from non-bank financial institutions. As many as 70% of MSMEs stated that the reason that they did not apply for loans from conventional financial institutions was due to objections to providing guarantees or types of loans that did not meet their needs.

Many MSMEs are still in the development stage and experience problems when licensing business entities. From the results of a survey conducted by DSInnovate, it was found that the legal form of business of respondents without PT/CV was 82%, while PT/CV was only 5,43%. In addition, most MSMEs do not have a formal organizational structure in running their business. In general, MSME actors prefer residential houses as their place of business, but it can also be in the form of shop houses (ruko), traditional markets, malls, and supermarkets.  

As a P2P platform pioneer lending, Group my capital has become a digital MSME financing service provider platform and has disbursed more than Rp 20 trillion with a total of 3 million loan transactions, starting from its launch in 2015 until the end of 2020 in Indonesia, Singapore and Malaysia. Modalku is dedicated to funding underserved MSMEs so that they can produce positive results in people who want to open businesses so that they can contribute to economic growth in Indonesia.

DSInnovate with Modalku has conducted a survey online which was attended by 350 MSMEs with an age range of 30 to 39 years regarding their experience with the use of funds lent from Modalku. Based on the data obtained, almost 83% of MSME actors have developed their own business for long-term goals and are led by retail trade as the highest sector. This is certainly a proof that the P2P . feature lending provided by Modalku can be trusted to help MSMEs in developing their business. 

Not only that, the survey taken from 2018-2019 data also proves that more than 50% of MSME owners use funds taken from Modalku to buy office raw materials on a small scale. They believe that the purchase of small-scale office raw materials in large quantities can support their production. The rest, those who borrow funds from Modalku are also used to rent a new place for a better work location. A total of more than four hundred million rupiah has been allocated and 67,9% of it was spent in 2019. 

The increasing opportunities for MSMEs to obtain funding from P2P lending, including funding from Modalku have a positive impact on the running of MSME businesses. First, in terms of cash flow management, funding can support MSMEs in managing their cash flow, as well as purchasing raw materials for additional stock of goods. Second, in terms of business development, funding can increase the production flow of MSMEs, as well as provide strategic options for developing businesses. Third, in terms of MSME performance, funding can support the smooth running of daily operations and financial constraints related to this. In addition, 41,7% of MSMEs agreed that not getting a loan from Modalku had an impact on the success of their business, where income was lower.

Given the significant role of MSMEs in the Indonesian economy and considering the difficulty of financing them through conventional financial institutions, the purpose of the research conducted by DSInnovate was to find out the extent of the economic and social impact of MSME financing in using the platform. fintech peer-to-peer (P2P) lending 2021. In fact, according to the survey obtained, as many as 20,3% agree that P2P funding lending Modalku helps minimize financial problems and launches the operational base of each businessman. Through various product innovation, Modalku aggressively opening access to working capital financing for Indonesian MSMEs.

Watch the report DSInnovate with Modalku entitled "Economic and Social Impact of MSME Financing Using the 2021 peer-to-peer Fintech Platform" HERE.