MiCrowd.es is a for-profit social lending p2p platform, the CEO, Alejandro de León shared his journey with InvestItIn.com.
What is the story behind MiCrowd.es?
In 2009 I started giving scholarships in Nicaragua, I was fascinated by the place and the genuine nature of the people. When I was living there, I had an urge to help the locals. When I posed the question “How can I help you?” I was repeatedly told: “We need financing, we need microloans”.
This is why I setup MiCrowd.es, a company incorporated in Spain. We have started our work with one particular community in Nicaragua, Nancital. This community is home to 20,000 people. The beautiful thing about this project is that it worked! We have now been in business for three years, we have grown slowly but surely.
What is the business model of MiCrowd.es?
Our system is a social system of lending, for a profit. We lend money only to women in Nicaragua. The banks in Nicaragua charge 40% for microloans, we charge 20%. We facilitate the investment in these loans by individuals and provide them with an 8% return.
We are social lenders, but we understand the need for investors to make a profit. We believe that it is possible to be social and profitable at the same time. We also contribute back to this community as we buy toys, books and clothes to those in need.
How do you perform due diligence of the potential borrowers?
In 2012, I was processing all loan due diligence myself. However, we now hire a local NGO to do this. I have a small story to share, about this.
One loan application I rejected was from a woman who needed the funds to buy a fridge. I rejected this request because we only provide investment loans and not consumer loans. When this woman received the news, she called me. She wanted the money to buy a fridge because her house was next to a footpath. A lot of thirsty people walked by her house, and she wanted the fridge to sell cold drinks. This taught me the importance of having feet on the ground, local connections and knowledge.
It is very important to understand the context of each loan. Since that time, we have used the services of a local NGO to approve or reject loans. They approve 50% of the loans.
What kind of loans do you offer?
All our loans are offered for one year and to females in the community of Nancital
Why do you lend only to women?
The default rate for women in this community is much lower than of the other gender.
Which statistics could you share about your MiCrowd.es?
- 500 loans have been repaid
- 50% of loan applications are accepted
- Zero defaults to this date (February 2017)
- The loan amounts vary from $200 to $2000 with an average of $700
- The length of all loans is one year
How can investors invest?
- Investors first register on our site
- Then they can deposit USD or Euro on their account
- Euros are converted to USD using Kantox
- On the site, they can find some loans they can participate in
- They can also send us an email with specific requirements on who they want to lend to. For example, we have requested to invest only in startups rather than in loans that will finance expansion, some people want to do this because they want to create jobs.
Is there any form of guarantee on the loans?
There is no guarantee on any of the loans, diversification is the key to spreading risk, and we can assist investors to do this.
Can you share future development plans for MiCrowd.es?
Our office in Spain is doing due diligence on three other communities in San Salvador, Nicaragua and Guatemala.
End of Interview
We thank Alejandro de León for his time and the anecdotes in his answers, they made the interview more interesting. Visit MiCrowd.es and learn more about the risks and opportunities that this p2p social lending site has to offer.
This is the first platform I come across which enables investors based in Europe to participate in US Dollar p2p loans. If you know of any p2p loans that allow EU-based residents to invest in US dollar p2p loans do share the info.