Lendela redefines borrowing experience to fight isolation and stigma

The startup offers a matchmaking space where determining one’s eligibility for a loan from a bank requires very limited personal data.

When Lendela CEO and founder Nima Karimi went to Singapore to start his firm, he was surprised that a good number of Singaporeans took a traditional stance around the concept of borrowing money.

“There's a certain stigma around lending which leads to shame and isolation when someone requires a loan. So it’s not often talked about openly and becomes this very lonely experience,” Karimi told the Singapore Business Review in a recent interview.

“We see examples of individuals applying [for loans] and not telling their spouses or parents which for me, is the obvious first step, you talk to your immediate family about a big financial decision,” Karimi added.

Recognising this gap, Karimi sought to provide a secure platform in Singapore for borrowers to transparently access eligible loans while helping credit providers match with more ideal customers. 

Lendela’s matchmaking tool

Applying for a loan can be tedious as there are over a hundred registered money lenders in Singapore and it will be difficult to check them all and do the research.

To resolve this, Karimi said Lendela acts like Airbnb to borrowers, whom they connect to lenders. The borrower’s journey starts with a need, such as a big life event like a home or car purchase, facilitating cash flow, or emergency funds. The borrower then applies to Lendela securely with the help of SingPass, a Singaporean’s trusted digital identity.

After this, Lendela’s matchmaking algorithm helps in comparing multiple loan offers customised to the individual’s profile for them to choose from. 

Once lenders receive the profile of the borrower, Lendela ensures that the information shared is anonymised, Karimi said.

“The lenders will review your profile and they cannot see your NRIC number or your phone number, email, or address, but they get to see enough information to give an accurate offer based on your profile,” said Karimi.

Once the borrower chooses a desired loan, only then are both the lender and customer given details for a follow-up appointment where the money will be made available, along with instructions on how to repay the loan.

An interesting feature is that applying for a loan through Lendela has no impact on the borrower’s credit score. For borrowers who apply with multiple banks or lenders individually, the credit score will gradually deteriorate, punishing the consumers who want to make a proper comparison before taking up a loan.

“Lendela’s model does not affect your credit rating. Once you get the loan, only then does it get recorded on your credit”, explained Karimi.

Lendela earns a small referral fee from the lender once a loan gets disbursed, allowing Lendela to favour the customer’s best interests regardless of which loan they choose from. With its matchmaking engine, Lendela is processing tens of thousands of loan applications yearly.

APAC expansion

At present, Lendela is backed by Singapore-based venture capital firm, Cocoon Capital, and so far, the fintech app has raised $5m in funding. Lendela is also in the midst of its Series A fundraising round.

Since launching in 2018, Lendela has since expanded its business in Singapore, Hong Kong, and recently, Australia.
Australia has over 300 licensed lenders, many of which operate solely digitally. In Australia, Lendela connects with Australia’s credit bureau to fetch the customer’s credit report, which offers a fully digital experience for both lenders and borrowers.

Apart from the three economies, Karimi said Lendela plans to launch in other Asia-Pacific markets.

“We look at markets where there are a lot of options for the customers, but also there is a lack of transparency in quickly figuring out the best loan terms,” Karimi said.

Lendela currently focuses on the personal lending industry as this is where they see the most need, said Karimi.

Despite this, Karimi said the industry still offers a variety of products such as small and medium-sized enterprise loans, car loans, mortgages, and credit cards, that the company could tap into in the future.

“That’s another area of expansion for us to add more products to our service, offering consumers transparency in personal finance in general Right now, we want to focus on doing personal loans well, but it’s possible to expand into more products in the future,” said Karimi.