Jakarta-based Peer-to-Peer (P2P) digital lending platform Modalku announced Wednesday it is expanding its partnership with Singaporean fashion e-commerce platform Zilingo to provide lending facility to latter’s 40,000 merchants and manufacturers.
“Modalku supports MSMEs by providing access to business capital loans. Our partnership with Zilingo has become a valuable opportunity to expand our market reach, not only in Indonesia but also in Singapore,” Reynold Wijaya, co-founder and CEO, Modalku, said in a statement.
This is not the first time Modalku has extended its lending service to the e-commerce firm. It has been aggressively looking for collaborations in Southeast Asia and has partnered with Indonesia’s big e-commerce startups such as Alibaba-backed Tokopedia, Lazada, Bukalapak, and Shopee.
Modalku said, this partnership will enable it to create a sustainable and responsible financing structure. It will use alternative data to make better credit underwriting decisions. At the same time, merchants will be able to gain timely access to working capital which is essential in helping them expand their inventory and scale.
Modalku quoted a 2018 survey by UOB, Dun & Bradstreet, and Ernst&Young, that said SMEs in ASEAN countries do not qualify for formal loans due to the lack of collateral, inadequate financial statements, business plans, or weak credit history. Approximately 67.8% of survey respondents preferred non-traditional financing options such as P2P lending platforms due to speed and flexibility in credit underwriting and quick access to funds.
Touted to be valued at about USD 1 billion, Zilingo raised USD 226 million in Series D funding round in February this year from Sequoia Capital, Burda Principal Investments, Sofina, Temasek Holdings and EDBI.
While Indonesia has become the largest e-commerce market in Southeast Asia, where its growth reached USD 12 billion in 2018, only 26% MSMEs could have access to credit. A PwC report on Indonesia’s financial inclusion said there are 63 million businesses of MSMEs segment that don’t have any formal access to credit.
