Payhippo, a Nigerian loan startup, has raised $3 million in a seed round. It plans to use the talent it needs to develop its technology. As it expands its efforts to provide speedy financing to more SMEs in the West African country.
It is the most money Payhippo has ever raised, after $1 million in pre-seed funding earlier this year. According to Chioma Okotcha, the company’s co-founder and chief operations officer. She cleared mentioned that they need more engineers and data scientists.
She stated tha they get data from the loans they issue. Furthermore, having more individuals on the team. Moreover, they would help them to optimize the technology. And, the goal is to serve our consumers better.
Payhippo promises to disburse relatively quick loans in under three hours. This is a record unmatched by traditional banking institutes in the region. Moreover, it generally imposes onerous criteria on borrowers. Such as maintaining minimum operational levels and regular account activity. A trip to a working place and the completed paperwork are required for a bank loan application.
“We worked very hard to keep it under 3 hours and to ensure that businesses get the funds they need on time.” “Ours is also a solution that works for SMEs in terms of a flexible payback schedule,” Okotcha said.
Small and medium-sized businesses (SMEs) are the backbone of Nigeria’s economy. They accounted for 96% of all businesses and 84% of all jobs. Recently, A Journal of HRM revealed a detailed report on bank loans and SMEs in Nigeria. It clarified that a lack of capital continues to hinder their growth. They are so, limiting their contribution to the country’s GDP.
Company has been dedicated s the funding gap since its launch
They saw that traditional banks and lenders would not lend to small businesses. Because of a lack of credit scores or excessive collateral requirements. So, they decided to enter the market and develop an instant financing alternative. That’s, Payhippo builds a credit score that helps small businesses receive the cash. While, they need to buy merchandise for business continuity.
They look at their banking history. Furthermore, they also take help from past records when lenders have made deals with them. As well as data from previous records. So, they analyze how their businesses are growing.
Payhippo uses its credit score method. Which is based on numerous SME data. They use it to determine the value of loans. The loans are disbursed using mobile phones. The average loan on Payhippo is over $1,300, and the smallest loan is around $200.
Payhippo says it intends to grow its customer base in Nigeria. Moreover, they also plan to move to other African countries. It emphasizes the speed of processing loan applications. . The company claims to have provided over 5,000 loans totaling $1 million with a 97 percent return rate. Payhippo has been generating $64,000 in revenue since its beginning. Furthermore, one should also note that loan demand is strong. So, it does increase the bolstering of the company’s existing 25 percent every month.
The Payhippo intends to tap into the financial needs of Nigeria
They have almost 40 million SMEs to expand its operations. They know that 1% of the Nigerian market represents roughly 40,000 businesses. Moreover, they want to be able to disburse 40,000 loans in a single day.
Payhippo is one of Nigeria’s many internet lenders. It offers short-term loans to SMEs. Other firms that are working for exact cause include Carbon and FairMoney. Last year, FairMoney disbursed $93 million in total loans. It is increasing 128 percentage points over the previous year. While, Carbon also reported that it reached 659,000 customers last year. And they granted $63 million in loans, up 9.1% from the previous fiscal year.