Lendsqr, a startup that offers essential software for companies looking to launch lending businesses, has announced a new line of credit for its clients. This new offering will allow businesses to issue more loans and expand their operations. Established in 2018, Lendsqr has a roster of clients that includes Kredi, Snapcash, and Blockacash. The company will be extending overdrafts to these businesses from a ₦1 billion fund.
According to Lendsqr CEO Adedeji Olowe, the company has "thousands of lenders servicing millions of clients." Qualified lenders will be charged 4% per month for the line of credit, with interest applied only to the portion of the facility disbursed to end users, specifically retail lenders. Olowe also stated that if lenders receive repayments from their borrowers and their account balance becomes positive, they will not have to pay any interest. Lendsqr will closely monitor loan usage to identify and mitigate potential risks.
For digital lenders that offer collateral-free personal loans, the cost of funds is a crucial factor in determining loan prices. Along with default risks, this often leads to higher interest rates for customers. While technology plays a significant role in the success of digital lenders, access to affordable funding is ultimately the key advantage.
Adedeji Olowe emphasized the importance of addressing the critical need for adequate capital in scaling loan businesses. Lendsqr’s decision to provide a line of credit aims to support lenders in growing their operations. This move aligns Lendsqr with other on-lending institutions, such as Lendable, the Nigerian Bank of Industry, and the African Finance Corporation.
Head of Sales at Lendsqr, Joy Bello, expressed excitement about being a catalyst for growth in Nigeria’s lending sector. The on-lending initiative is not just about providing capital but also about fostering a stronger, more inclusive financial ecosystem where all licensed lenders, regardless of size, can thrive. Lendsqr operates on a subscription model, with packages ranging from ₦20,000 to ₦1 million per month for Nigerian businesses and $1,000 per month for international clients.
Looking ahead, Olowe shared plans to close ongoing capital discussions by next year, enabling other lenders to provide 20 times more capital to additional lenders. Lendsqr is also considering expanding this initiative to other countries where they are operational or available.
Overall, Lendsqr’s new line of credit offering signifies a significant step towards supporting the growth and success of lending businesses in Nigeria and beyond. Source: Tech Cabal
