Alternative lender Tienda Pago is bringing attention to Latin America’s small business (SMB) finance market with new funding announced.
Reports in ImpactAlpha on Monday (April 9) said Peru-based Tienda Pago, which operates in Peru and Mexico, secured $7.5 million in Series A financing from Kaszek Ventures, QED Investors, Oikocredit, Accion Venture Lab and Agrega Partners. The company said it will use the funds to expand across Latin America.
Tienda Pago provides micro loans to small- and medium-sized retailers in the form of lines of credit that last one week. The company links SMB borrowers to financing via mobile phone and has already serviced 17,000 businesses since 2013, reports said. The startup aims to relieve large companies from acting as financiers to their small suppliers, instead disbursing finds directly to those corporate buyers. The SMBs then repay that loan as they make sales in their stores.
Latin America is a promising market for trade finance expansion. In a previous interview with PYMNTS, Aztec Exchange COO Oliver Gabbay explained why the Irish company expanded its invoice financing solution into Spain and Latin America, a market in which the regulatory and economic climates are prime for industry disruption.
According to Gabbay, the region struggles with late supplier payments. Earlier research from Atradius also found that Latin American businesses said maintaining sufficient cash flow levels is their prime concern, with more than a fifth noting that collecting outstanding invoices is their top challenge.
According to Atradius, more than 38 percent of B2B invoices were paid late across the Americas, and Mexico’s late payments problem is among the region’s worst, with the highest value and volume of invoices being paid 90 days past due.
Gabbay highlighted Latin America’s prevalent eInvoicing mandates, however, that make invoice financing and other forms of trade finance a more seamless process.