Given the challenges that continue to inhibit access to borrowing by local micro and small businesses for the purpose of strengthening the foundation of existing but under-financed enterprises, the model utilised by the Jamaican lending platform known as Esther Finance Ltd. may well be worth a try here.
A Caribbean Business Report (CBR) story which appeared on Monday described the peer-to-peer (p2p) platform approach being employed by the privately-owned company as an initiative aimed at “humanizing lending,” an approach that may be particularly relevant here in Guyana where efforts by small businesses to access finance can sometimes rival ‘pulling teeth’ as it relates to the extent of the ensuing difficulty.
P2P lending, the CBR story says, is “the practice of facilitating loans to individuals or businesses through on-line services that match lenders with borrowers.” Jamaican Entrepreneur Javette Nixon is Esther Finance’s Chief Executive Officer and the company’s primary concern, the CBR report says, is with improving and accelerating innovative Caribbean businesses in the technology and consumer sectors. The report says that the company is also keen on “building an ecosystem that promotes people-driven solutions and financial education.” The company, the CBR report says, “is also keen on building an ecosystem that promotes people-driven solutions and financial education.
A key element in the Esther Finance model that is likely to interest existing and emerging small businesses in Guyana, is the role it plays in creating a zone of comfort for borrowers, one which removes the procedures and strictures associated with accessing financing from the traditional lending sector, particularly the banking sector. “With our peer-to-peer lending initiative we will provide a platform where users can lend and borrow money from their peers through Eve – a secure, smart, contract-enabled platform built to facilitate end-to-end peer-to-peer lending,” Nixon is quoted as saying.
Additionally, the company CEO points out that the concept “makes it possible for lenders to earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates,”
In order to use the service as either a borrower or a lender each user will be required to create a profile by signing up for the platform and uploading documentation for verification by an account executive assigned to each user’s profile. After the vetting of the documents, each user receives a lending/borrowing limit assigned to his or her profile. The user can choose to borrow or lend up to this limit as a starting transaction. However, this limit is doubled upon the successful settlement of each transaction. Lenders are responsible for evaluating the bona fides of potential borrowers by reviewing a loan request form and afterwards, indicating their desired loan terms to fund the transaction. Afterwards, an Esther Finance Account Executive will engage the two parties in order to facilitate the completion of the transaction.
“The security of the platform is of utmost importance to the Esther Finance team, so not only do all users have to provide proof of identification and other verification information, they also need to be recommended by a previous user of our services. This is to minimize the chances of any wrongdoings,” CBR quotes Nixon as saying.
The scarcity of options for accessing finance for micro- and small-business development coupled with what, frequently, are borrowing requirements which would-be borrowers are required to meet are widely regarded as one of the primary impediments to small business growth in Guyana.
