We would like to introduce to you a new Colombian loan originator which offers its loans on the portal Bondster.com where you can invest in them. The company Juancho Te Presta (translates as “Juancho will lend you”) specialises in loans for employees and small businessmen. The loans offered will have a maturity between 12 to 24 months and will earn 17% interest p.a. We have made a short interview with the company CEO Juan Esteban Saldarriaga.
Could you please describe your company?
Juancho Te Presta is addressing the need of thousands of middle-class employees and gig workers, who have been underserved by Colombian banks or served by informal shark loans. We provide instalment loans for up to 2x salary/income with tenures up to 24 months. We have finetuned our credit algorithms to minimize friction but maintaining a thorough KYC. We were the 1st fintech in Colombia to use electronic video streaming biometrics and “bank scrapping capabilities” to assess and validate our customers. We are also the 1st fintech in the market to have a product tailored for women, with special scorecards to better understand their risks and price accordingly. We use alternative data from social security and other databases to correctly approve 1 out 5 applications.
We launched in December 2019, have issued more than 2,000 loans, have processed more than 50K applications and have more than 50K visitors to our website every month. Our team is comprised of professionals with ample experience in retail, fintech and finance. Thru our partnership with RapiCredit company (leading short-term lender in Colombia with more than 750k given loans), we share experiences, processes, and best practices.
The company is on course to breakeven in the middle of 2021. We are currently implementing origination partnerships with a couple of financial institutions. We are the 2nd fintech to enter the space of BuyNowPayLater with our “JuanchoTePaga” product, where customers can use their approved line in more than 30 retailers.
What opportunities people have to borrow money and what is specific for them?
80% of workers in Colombia are employed by SMEs where payroll debit loan agreements with banks are inexistent. As the trend to a gig economy in Latin American countries continues, many freelancers and independent professionals do not have access to formal loans from financial institutions for basic needs like transportation, home improvement, dental health and home and telco appliances. Only 9 million Colombians have a credit card out of 35 million adults. For women, the discrimination in financial institutions is compounded by the fact that most of banks scorecards are skewed for men. Juancho Te Presta is helping middle-class workers with salaries above the Colombian median of €350, with easy and accessible loans.
What is your position on the market?
Although we are a startup, we are backed by the experience and track record of RapiCredit, with a 35% share of short-term digital loans in the market. Juancho Te Presta wants to move upmarket with longer tenure and bigger amounts for clients that are not served by RapiCredit’s present offer.
Is lending in Colombia subject to any regulations?
We are a non-regulated financial fintech, supervised by the “Superintendencia de Industria y Comercio” for the issuance of commercial/consumer loans. We are part of the industry group Colombia Fintech and as long as we do not receive money from the public, we do not need a license to lend.
Which kind of loans do you offer in your country and which of them will you offer on the Bondster Marketplace and for what interest rate and other condition?
We will be posting loans across our portfolio, between 12 and 24 monthly instalments with an average of €400 per loan. We are planning on rates around 17% with the possibility of investors opting out of investment after 6 months with a buyback guarantee of 60 days.
What is the structure of your clients or target group?
We focus on employed and self-employed people. The vast majority of our clients (87,6%) are employed, about a tenth of clients are self-employed. We try to avoid lending to retired people, students and temporary employees. We identify 3 key segments of clients: young professionals with an university degree, adult technicians and employed or self-employed adults with the age of 45-55.
What people usually borrow money for?
During Covid-19 lockdowns the major purpose of our loans was for household expenses (24.6%), to cover an unexpected expense (23.3%), to invest in own business (10.6%), for studying (6.6%) and renovation of own house (5.3%).
With the launch of “JuanchoTePaga” and the opening of the economy again, people are now using our loans for home repair, transportation and developing a new business.
What is your average interest rate on loans?
The average interest rate is 26.5% p.a. Customers have the option of instrumenting their loan thru a paper application or to use our technology to streamline the process and get disbursed in less than 24 hours for an additional service charge. Also, customers need to bring a codebtor, or they can use one of our 3rd party endorsement agencies.
Have you been affected somehow by covid-19 pandemic? How did you cope with the situation?
Scaling in full covid lockdowns has been one of the biggest challenges the company will have. We were able to adjust our scorecards on the fly given our cloud decision engine and the use of social security information from 3 different providers, giving us up to date information of employment status. Our bank scrapping functionalities provided and extra edge that other lenders have still to catch up.
Could you please describe your risk management policy briefly?
Our cloud decision engine incorporates information from the two credit bureaus in Colombia (Experian and Transunion), and three social security information providers, plus fingerprinting information from devices and customer application data. We use Rapicredit’s “customer fraud redflags” and use 2 scorecards (one for women and one for men) using specific variables both for sex and employment/gig profiles. We take into account time in job, income and payment history.
What will you use the capital raised for?
All raised money is for new origination of loans.