Sao Paulo-based Frubana is supporting small food businesses and farmers by helping them connect through an online marketplace. It’s now expanding into financial services through a partnership with Accion and the Mastercard Center for Inclusive Growth.
Frubana’s embedded credit offering will provide access to working capital and inventory finance for 200,000 businesses that otherwise struggle to access affordable financing.
“For micro-enterprises to take full advantage of digital procurement, they need to be able to access financial services,” Accion’s Iain Brougham told ImpactAlpha. “They can’t order goods and inventory consistently if they are not able to access working capital.” .
Alt-credit scoring
Accion and Mastercard Center for Inclusive Growth offer technical assistance to microfinance institutions and digital platforms developing new financial products and services for underserved small businesses.
With Frubana, they have helped create an alternative credit scoring model that uses data, like a business’s procurement history on the marketplace, or logistics engagements, to gauge creditworthiness. Frubana has already provided 80,000 working capital loans, a third of which support first-time borrowers.
Embedded finance
Accion and Mastercard have provided similar support for Ethiopian bank Dashen, Indonesian peer-to-peer lender Amartha, and Indian small business marketplace Bizom. The pandemic made clear the enormous opportunity to digitalize informal and largely offline small businesses in emerging markets.
The troves of data collected by companies like Frubana, Bizom and others can rapidly accelerate financial inclusion, says Brougham (for background see, “Why ’embedded finance’ is emerging as the future of global financial inclusion”). “We’re interested in creating commercially sustainable and viable models for improving the lives of micro and small enterprises, so that there can be follow-on investment from the private sector.”
