If you were short on cash but needed to sort out a few financial needs urgently, chances are you would approach family and friends for a loan. Say you are in their very good books, you might be lucky to get the loan without interest. However, interest or no interest, experience has probably taught you that borrowing from family and friends is not without its repercussions.
As an alternative, you might opt to take a loan from your bank. But everyone knows Nigerian banks will charge you high annual interest rates and still take collateral. You stand to lose your most-prized assets if you do not pay up your loan on time. Needless to say, obtaining a loan in Nigeria can be very challenging. But that's the exact problem Aella Credit, a new FinTech startup, is solving.
Aella Credit is an online lender that helps people borrow money responsibly and instantly, the keyword being "instantly". This means that loans are approved without the hassles of physical vetting or collateral tendering. Users can apply for loans via the website and in real-time have the loans approved and ready to disburse.
Founded by a team of Investment Banking, Corporate Law and Risk Management gurus, the FinTech startup is set to disrupt the money lending business in Nigeria.
How Aella Credit works
In order to make the borrowing process as seamless as possible for you, Aella Credit utilizes a proprietary algorithm which was built with help from technology and risk management experts vested in the Nigerian lending space. All that is required from you are a few financial details (most of which are automatically sourced from your BVN), how much you want to borrow and how long you want it for. You receive instant feedback on your loan approval status.
This is made possible by integrating relevant metrics, via an Application Programming Interface (API), to efficiently automate the approval process. Intending borrowers are either auto-approved, auto-referred (if the algorithm determines that not enough info is given) or declined, all in real-time.This is something no other money lender in Nigeria is doing at the moment.
The metrics used include social demography, income level and credit rating. If that last metric had you raising eyebrows, you're probably not alone in wondering if Nigeria actually has a functioning credit rating system. Apparently, as Aella Credit Co-founder Akinola Jones lets on, Nigeria does:
"Aella Credit is hooked up to the 3 main Credit Bureaus in Nigeria", Jones tell us, "these Credit Bureaus have over 15 million people on their system. If you've ever borrowed money from a bank or any other money lenders, chances are you are in the Credit Bureau system".
But what happens the millions of other potential borrowers who are off the grid? That's where another unique value proposition comes to play - Aella Credit is confident enough in its proprietary algorithm to take the risk on those "clean borrowers".
"One thing we pride ourselves in having no NPLs (non-performing loans), says Jones, "We are not your regular consumer lending company no; we are a Financial Technology company. What we are trying to build is a seamless process that does not require human interaction".
It's a win-win for the FinTech startup as it also provides a perfect opportunity to build a proprietary credit rating system. Of course, because they are willing to take a risk of you, borrowing does come at a price. Depending on the amount and duration of the loan.
Loans are disbursed via a variety of channels including direct bank deposits, custom credit cards and, in the very near future, even Bitcoin. As of this publication, while loan approvals are instant, loan disbursements could take as much as 24 hours. However, Aella Credit has a few technologies in the pipeline to provide instant loan disbursement by December 10.
As for repayment of loans, Aella Credit provides you with an array of options - direct debit, deduct at source, POS and online payment gateways like Quickteller.
The adoption and growth levels
Reception for Aella Credit has been nothing short of impressive. In the 2 months since it has been in operation, Aella Credit has managed to loan out over N100 million to over 900 Nigerians. All at 120% growth, no marketing, no hype. At the current growth rate, Aella Credit projects in will loan out over N600 million by the end of 2015.
Where is all this money coming from?
Of course, all the collateral-free lending must cost somebody. Aella Credit is the brainchild of Akinola Jones and Eromosele Okojie. A chunk of the initial seed capital for Aella Credit was raised by them.
Between them, Jones and Okojie have over 18 years of experience in Investment Banking. They are joined by another Co-founder, Adedoyin Onayemi who has vast experience in the consumer lending space, having taken on senior management roles at RenMoney, FCMB and Standard Chartered Bank. Notable directors of the company include Ercin Eksin of ACE and Kehinde Oriola, Co-Managing Director of Deal Dey.
Beyond the initial capital, Aella Credit has gone on to raise and additional $1 million seed funding. The startup looks to raise another $6 to 10 million by the end of the year. As funding sources increase, Aella Credit plans to make their interest rates more flexible, depending on users' credit ratings.
Aella Credit is one of 10 startups to make it into the Barclays Tech Lab accelerator programme for African FinTech and Health startups. Aella Credit was also one of 9 participating startup in the Steve Case Foundation Pitch for Lagos.
You can begin applying for instant collateral-free loans today by visiting the Aella Credit website