Mercado Libre Inc, the Argentina online marketplace, is gearing up to offer working-capital loans to entrepreneurs in Brazil and Mexico during 2017, reported Reuters.
According to a news report, the move is part of an expansion of a program the company launched in Argentina in May. With the new feature, sellers that use Mercado Libre Inc. and its Mercado Pago payment platform can get loans that are equal to as much as two months of their monthly sales, Ignacio Caride, head of the company’s Mexico operation, said in the report.
“We know what they sell, how they’ve grown their sales in recent years, how they treat their customers, how they resolve conflicts,” Ignacio Caride said. “No bank has that kind of granularity.”
Reuters noted that thanks to advances in the analysis of big data, Mercado Libre can use information it collects about customers and their transactions in Latin America over 18 years. And since the company is using its own money, the executive told Reuters it doesn’t need the government to sign off on issuing the loans. He wouldn’t say how much interest the company would charge on the working-capital loans.
The report noted sellers won’t be required to sign documents or provide financial information to receive the working-capital loans, dubbed “Mercado Credito.” To get approval for the loans, the seller has to have proven cashflow and significant sales, noted Reuters.
“We believe Mercado Credito could make Mercado Libre 100 times larger than it is today,” Caride added. Reuters noted Mercado Libre will invest more than $100 million in Mexico this year and end 2017 with 40 million regular users in Mexico and at least one million sellers.
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