Payhippo Raises $ 1 Million For B2B IA Loans
Payhippo, the artificial intelligence (AI) -based lending platform, has raised $ 1 million in pre-seed funding, which it plans to use to hire more engineers and continue funding small companies, a press release from Friday, July 2 said.
The round was led by African technology investors such as Ventures Platform, Future Africa, Launch Africa and Sherpa Ventures with the participation of international investors, Hustle Fund and Mercy Corps Ventures.
The news comes as small African businesses are still not well served by commercial banks. In Nigeria, many still work in the “informal economy”, which is made up of small and medium-sized enterprises (SMEs), and these enterprises have not been able to obtain financial services from large enterprises.
According to statistics from the press release, two thirds of the economy in this region constitutes the “informal economy”.
These business opportunities created more work than the formal sector, the statement noted.
But despite this, some small businesses have still not been able to access larger scale services, even despite their creditworthiness. The statement noted that they often cannot get regular banks to lend them because they lack credit scores and overly high collateral requirements. Most small business credit loans end up being cash based, making it harder for them to build a credit footprint, and keeping such poor records hasn’t helped either.
Payhippo worked with automated technology to help work with its clients, enabling Payhippo to grant loans quickly and then effectively spend lenders’ capital. Small businesses can sign up for the platform, and then the business examines its cash flow and business data, using that to determine what type of loan is best for them.
PYMNTS recently wrote that with both supply and demand thriving, the state of small business lending has focused on new ways of financing – especially as government assistance funded for the fight against the COVID-19 pandemic is running out. According to Sam Graziano, CEO of Linear Financial Technologies, the problem comes down to too much caution by lenders, even as things return to pre-COVID levels. He said small businesses, however, would likely be more willing to go digital, as it worked with things like the Paycheck Protection Program (P3).