Lendsqr, a startup that provides all the software companies need to start a lending business, will now offer its clients a line of credit to help them provide more loans to grow their businesses. Founded in 2018, Lendsqr counts Kredi, Snapcash, Blockacash among its clients and will offer these businesses overdrafts from a ₦1 billion purse.
The company, which claims to have “thousands of lenders servicing millions of clients,” will charge qualified lenders 4% per month, and claims interest will be collected only on the portion of the facility that’s disbursed to end users, i.e., retail lenders.
“If they get repayments from their borrowers and their account swings into positive, they don’t even pay any interest at all,” said Lendsqr CEO Adedeji Olowe, adding that Lendsqr will track how the loan is used to identify and address potential risks.
For digital lenders that offer collateral-free personal loans, the cost of funds plays a significant role in loan pricing. Coupled with the risk of defaults, customers sometimes have to bear the brunt of high interest rates. So, while technology remains crucial to success for digital lenders, relatively cheap funds are the holy grail.
“For a long time, we believed that providing top-tier lending technology was enough to help lenders scale,” said Adedeji Olowe, CEO of Lendsqr. “But technology alone cannot scale a loan business without adequate capital. That’s why we decided to go a step further and solve this critical need.”
With this offering, Lendqr now joins a coterie of on-lending institutions—lenders who lend money to lenders—such as Lendable, the Nigerian Bank of Industry, and the African Finance Corporation.
“We’re excited to be the catalyst for growth in Nigeria’s lending sector. Our onlending initiative isn’t just about providing capital. It’s about enabling a stronger and more inclusive financial ecosystem where every licensed lender, big or small, can thrive,” Joy Bello, Head of Sales at Lendsqr.
Lendsqr runs a subscription model with packages ranging from ₦20,000 to ₦1 million per month. For non-Nigerian businesses, the product is priced at $1,000 per month.
“By next year, we would have closed some of the ongoing capital conversations and should see other lenders provide 20x capital to more lenders,” Olowe added. “We are also looking at extending this to the other countries where we are either operational or available.”
