South African digital lender Lulalend has raised a $6.5 million Series A round co-led by IFC and Quona Capital. The Cape Town based startup uses an online application process and internal credit metrics to provide short-term loans to small and medium sized businesses that are often unable to obtain working capital. Lulalend will use the round to build its tech and data team and improve its ability to reach more SMEs in South Africa, according CEO Trevor Gosling—who co-founded the startup in 2014 with Neil Welman. “The biggest thing is strengthening our balance sheet so we can access traditional debt funding to grow our loan book,” Gosling told TechCrunch on a call. On the market for Lulalend’s business, Gosling highlighted IFC numbers indicating a $23 billion financing gap for South Africa’s SME’s—which are estimated to contribute 34 percent of the GDP for the country of 56 million. Lulalend’s loan sizes range from around $1500 (≈ 20,000 South African Rand) up to $70,000, for 6 to 12 month tenors, requiring monthly payments of one-sixth or one-twelfth the total loan with monthly costs of 2 to 6 percent. The most common loan is around $10,000 (≈ 148,000 Rand) over a 6 month term for a cost over principal of roughly $1700, according to Gosling. SMEs can apply online and need a bank account to receive a loan disbursement.

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