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Fintech wants to give loan borrowers more time to get their ducks in order

Don't worry, we speak : Español (Spanish), too!

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Contxto – For many, money will be tight the next couple of months. And it will be even tighter for those who have taken out a loan. How do you make ends meet if you’ve had to close your business or you’ve been let go?

With these users in mind, Argentine fintech Ualá announced last Wednesday (1) that it will postpone the due date for borrowers to pay. Consumer credit payments due between the dates of March 20 and April 19 will now have an additional 30 days to cover the loan and they won’t be charged any additional interest fees.

Ualá, loans, and Covid-19

“This measure conveys a large effort on our end,” said Pierpaolo Barbieri, Ualá’s Founder and CEO.

“But we know our users are also making a large effort to pull through these uncertain times. The only way to overcome Covid-19’s impact is if we all do our share. That way, we’ll get through together.”

Perhaps you’re wondering what the entrepreneur meant by “a large effort on our end.” I mean, what’s the big deal? His startup raised a boatload of money last December after all. And besides, as the loan provider, they hold the reins in the financial relationship with debtors… don’t they?

The devil’s in the details

At the risk of playing devil’s advocate, I’d say the answer is a little more complicated than you think.

Startups that offer credit lines to consumers are also greatly exposed to the effects of coronavirus right now. 

As businesses slow down—or cease operations altogether—and unemployment rises, a fintech’s risk of not getting their money back at all is a very real and ever-increasing possibility.

Moreover, many fintechs like Ualá tender to users that have a less extensive credit history (for which they’re ignored by banks), so there’s additional exposure there too.

And just as individual consumers must answer to financial and banking institutions for their credit lines, startups too must respond to their investors.

Related articles: Tech and startups from Argentina!

-ML

Mariana López
My topic darlings are startup management, edtech, and all-things pop culture. J Balvin is Latin America's best reggaetonero and I dare you to convince me otherwise.

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