1. Startups

Modalku Launches "Virtual Credit", Help SMEs Control Cash Flow with Paylater

Provide a credit limit for the procurement of raw materials to suppliers (online/offline); previously did an initial project with BukaProcurement

In order to strengthen its position as a digital MSME funding platform, Modalku launched "Virtual Credit", a facility paylater to support the business needs of Micro, Small and Medium Enterprises. Previously, Modalku had launched a collaboration with OpenProcurement to launch initiatives paylater This B2B.

Modalku Virtual Credit is a facility paylater business in the form of loan services provided in the form of a credit limit that can be used to transact digitally on the platform or online/offline suppliers. With a fast approval process, this facility can be used to increase stock of goods, develop businesses, as well as the urgent needs of MSME actors.

This Modalku Virtual Credit facility can be used by individual MSMEs and business entities (PT/CV) to manage and control business cash flows with easy access. The limit given will be adjusted to the scale of the business. The individual MSME category can get a credit limit of up to Rp. 100 million, while for MSMEs with business entities it is up to Rp. 500 million. MSMEs can apply for this facility without the need to have collateral.

Currently Modalku has collaborated with more than 100 online suppliers and offline to assist MSMEs in meeting business needs. Multiple platforms online Those who have collaborated include JD.ID, Bizzy, Blibli, Jubelio, and will continue to grow as services develop.

“With the facilities paylater For this business, we aim to provide flexibility to MSMEs to get a longer maturity and help MSMEs to control cash flow better because income or receivables often fluctuate from time to time, especially in times of a prolonged pandemic and uncertain,” said Modalku's Head of Growth and Partnership Arthur Adisusanto.

Cash flow itself is the lifeblood of every line of business. The ability to be able to manage income and expenses is an essential science in developing any business. When cash inflows are slower than outflows (negative cash flow), running and growing a business becomes difficult.

QM Financial Lead Financial Trainer Ligwina Hananto said “The solution from the presence of a digital funding platform must of course be balanced with self-education starting from planning financial needs, how to manage, and monitoring. Entering the era of technology, the public must also be more understanding and careful in choosing a funding platform that has been registered with the OJK. And make sure the facilities offered are appropriate to meet business needs. Although there are many options for applying for a loan, be sure to remain responsible for the loan submitted."

In selecting prospective customers for this feature, there are 4 main processes. First, by doing pre-screening to validate the completeness of documents such as KTP and NPWP. After that, an in-depth analysis will be carried out to ensure the business owner can repay the loan, one of which is seen from the credit scoring. Then, at the , business people must sign a loan agreement document or e-KYC. Finally, there is a layer of security that will detect the use of credit for business or consumptive purposes.

Credit distribution for MSMEs in Indonesia

One of the potential developments of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia is influenced by the number of lending to MSMEs which generally grows every year. MSME loans are given to micro, small and medium business debtors who meet the definition and criteria for Micro, Small and Medium enterprises as stipulated in Law no. 20 of 2008 concerning SMEs. Based on the law, MSMEs are productive businesses that meet business criteria with certain limits on net worth and annual sales results.

In Indonesia, Modalku is not the only platform that targets the MSME market in lending. There is KoinWorks who continues to add ranks Actioncalendar institutions for channeling MSME loans on its platform. Besides that, there are investree who just got extra debt funding.

According to the data compiled by the team DSInnovate In the Fintech Report 2020, the market share as the most frequently used platform is Modalku with 21,6 percent, followed by KoinWorks with 21 percent, and Investree with 18,9 percent. Then, there is ModalRakyat 16,2 percent, Akseleran 10,3 percent, AwanTunai 9,6 percent, Mekar.id 9,3 percent, and Taralite 7,2 percent.

Modalku provides digital funding services, where borrowers (potential MSMEs) can get unsecured business capital loans of up to IDR 2 billion funded by platform lenders (individuals or institutions seeking funding) through the digital market.

Apart from Indonesia, my capital has also operated in Singapore, Malaysia, and Thailand under the name Funding Societies. To date, the Modalku Group has succeeded in disbursing business loans of Rp 26,47 trillion to more than 4,8 million MSME loan transactions.

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