1. Startups

Pintek Gets Support from the United States Government Through the “Loan Portfolio Guarantee” Mechanism

Get guaranteed funds of up to 230,4 billion Rupiah to overcome potential defaults

In early March 2020, two institutions under the United States government, namely the US International Development Finance Corporation (DFC) and the US Agency for International Development (USAID) announced their approval to release new investment funds in response to recovery from the pandemic. There are several focuses that are submitted to be applied in various countries, one of which is related to education. From Indonesia, education financing startup Smart who gain trust.

DFC and USAID provide "loan portfolio guarantee" up to $16 million or equivalent to 230,4 billion Rupiah to help Pintek maximize its potential. The funds can be used to cover defaults and return the investment to the lender -- considering Pintek is p2p loans. It is known, the pandemic condition has disrupted the economy of many elements of society. But for sure, there is a strict analysis and scoring scheme to declare defaults that can be covered with these funds.

The fund is also expected to increase the capacity of Pintek, so that it can reach more students at the vocational school and higher education levels throughout Indonesia.

"Pintek, through its Pintek Institutions loan product, helps educational institutions both higher education and vocational education to provide equipment, improve facilities, and also their operational needs. This partnership with the US Government is expected to help the education sector in Indonesia, provide better educational outcomes and improve work ability," said Tommy Yuwono, Co-Founder & CEO of Pintek.

James Polan as VP Office of Development Credit DFC said, "Our partnership with Pintek is to open up opportunities for access to education for children, especially for those whose parents are directly affected by the direct economic impact of the pandemic. We are very happy to see lending companies like Pintek in create financing solutions that address today's key challenges."

To support credit disbursement, earlier this year Pintek also booked debt funding from Accial Capital with a value of 298 billion Rupiah. Previously in December 2020, they also managed to get a follow-up investment led by Finch Capital, so far the total equity funding that has been obtained has reached 70 billion Rupiah.

More Coverage:

The education financing business model has indeed become one of the attractive opportunities in Indonesia in the midst of various limitations to education services, both formal and non-formal. There are several mechanisms that run, for example using Income Share Agreement – allows students to get full education funding, then pay when they find a job. Another form is offered in the form of loans with certain tenors. Usually the funds (70% to 100%) are channeled directly to the intended institution.

According to data Edtech Report 2020, currently there are several startups that focus on playing in this realm. Besides Pintek, there are Dana Cita, DANAdidik, EiduPay, and KoinWorks.

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