Argentinean online retailing firm MercadoLibre will start offering loans to small- and medium-sized enterprises (SMEs) in Brazil and Mexico before the end of 2017.
Thanks to data analytics technology, the online retailer says it is better positioned than banks to identify eligible borrowers. The company claims it can look at the product a company is producing and measure the demand for that product in the market, helping to determine loan eligibility.
“No bank has that kind of granularity,” said Ignacio Caride, head of the company’s Mexico operation in an interview with Reuters.
MercadoLibre has not yet revealed how much interest it would charge on loans. The retailer is not seeking a banking license, instead saying it will lend its own money.
Businesses can expect to borrow twice the value of their two-month turnover, but only those who use the Mercado Pago payment platform are eligible for loans.
The big beneficiaries would be small entrepreneurs who have little or no credit history and struggle to obtain bank loans, according to Mexico’s Spanish news portal Launion.
Most importantly, borrowers will have no need to pledge any property or asset against the loan. The retailer will assess with the help of its database whether or not the borrower would repay the loan.
Brazil and Mexico are the largest markets for MercadoLibre, with these two countries accounting for about 60% of its revenue. Earlier in March, it announced plans to invest US$100 million in Mexico, saying the growing sales of smartphones in the country were an indication of an upcoming surge in demand for online retailing.