Digital alternative finance channels are giving millennial micro-small-and-medium-enterprise (MSME) owners more capital to fund their businesses, according to THE ASEAN Access to Digital Finance Study. About 42% of the survey respondents, consisting of 25-34-year-old sole traders or entrepreneurs with a handful of employees, report that platforms like micro-lending, crowdfunding, and Buy-Now-Pay-Later are critical to improving their productivity and expanding their markets.
About 600 individual consumers and MSME founders from five ASEAN countries formed the survey base of the study published by the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School and the Asian Development Bank Institute (ADBI). The leading demographic of MSME respondents was from ages 25 to 34 years old. About 53% had been operating for one to five years, and a smaller proportion ran companies that were less than one year old.
The study concludes that alternative digital finance is important in providing them funding access. Other reasons why MSME owners adopted them are better customer service, flexible terms, ease of getting funding compared to traditional sources, and speed in receiving the funds.
One illustration is Amylene “Aimee” Dingle, who built her successful food stall with just a P1000 loan from the online lending platform Tala. To Dingle, securing finances through digital means is like a partnership. She describes Tala as a “companion that supports me and helps me achieve my goals. It’s so easy to get a loan from it. I can always count on it.”
Dingle’s success story shows how online digital lending and capital-raising platforms are opening more opportunities for many people who previously had a hard time getting funding. She has been using Tala to run her business. Before tapping the online lending platform, her dreams of starting her own business to support her family seemed impossible: Dingle back then was unemployed, had no savings, and could not obtain bank loans.
After learning about Tala through a Facebook ad, she took a chance to start a micro-business, downloaded the app, and applied for a loan of PHP1,000. After only a few minutes, a text message informed her of the loan approval which she could pick up at the nearest remittance center. That first Tala loan enabled her to purchase cold cuts, hamburgers, and hot dogs and sell them to her neighbors. It was the start of her small food stall. In just 30 days, she paid back the loan together with the 15% interest and small processing fee Tala charged her. Dingle has been continuing her business ever since.
Today, because of diligent repayment, Dingle can apply for the maximum amount of credit that Tala offers. Now, her business has grown, nearly doubling her household’s income, and empowering her and her family to move to a quiet and clean neighborhood.
Donald Evangelista, General Manager for Tala, said of this success story, “We made our loans to be flexible and easy to access so that more people, especially the unbanked, can gain the life-changing opportunities they deserve. We’re very proud that Aimee was able to use our services and we hope to continue helping her and many more.”
Tala is a global technology company building the world’s most accessible financial services. Their financial services provide customers with flexible, convenient, online microloans to help support the unbanked and underserved population. Tala has given USD 3 billion + loans to more than 7 million people across three different continents. Customers have used Tala products to start and expand small businesses, manage day-to-day needs, and pursue their financial goals with confidence. Start your journey into financial freedom: https://tala.ph/borrow/
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