Lending platform Lidya is targeting Poland and the Czech Republic for expansion after providing thousands of loans in Nigeria, seeing an opportunity in the funding gaps facing small enterprises in fast-growing European economies.
The fintech company funded by venture capital entities such as Omidyar Network and Alitheia Capital plans to disburse 1 billion euros ($1.1 billion) within the next five years to small businesses unable to get bank loans, Ercin Eksin, co-founder of Lidya, said in a phone interview. The company will seek customers especially in the agriculture, pharmaceutical, and retail sectors.
Expanding to new locations will be a test for Lidya’s online scoring system that captures data with the aim of making fast decisions on whether to grant short-term loans. Lending agreements for Polish and Czech customers may average $15,000, compared with $3,000 in Nigeria, where the firm has issued 10,000 loans. Lidya has hired the former head of Polish factoring company Idea Money SA to run its operations in the country and doesn’t expect an economic slowdown caused by headwinds buffeting western European economies to impede its growth.
“Together with the long-term investors on our side, we are basically agnostic to business cycles,” said Tunde Kehinde, another co-founder of the firm. “During slowdowns, banks restrict themselves from taking risks while businesses still need to function and finance their operational expenses.
Poland is among the countries with the highest loan rejection rates for small and medium enterprises, according to a 2019 report by the Organisation for Economic Cooperation and Development.
Lidya plans to enter as many as four countries each year, including further potential eastern European markets. It will initially make $10 million of new capital available for financing companies’ operating expenditure and said it is able to provide an additional $200 million in pursuit of the expansion.