Black founders face extreme challenges in raising funds to expand their business operations. Half of small businesses are turned down when they first apply for financing, according to ThinCats data, and the situation is more pronounced among black-owned businesses.
To help black startups overcome these challenges, Demi Ariyo founded Lendoe, a UK-based lender to help young black and ethnic minority entrepreneurs.
“Black and ethnic minority entrepreneurs are too afraid to approach banks … their businesses need financing, but because they feel they are going to be discriminated against or rejected, they don’t try it,” he said. he told Business Insider.
Ariyo started Lendoe in 2017 as an assistant and in 2019 started working full time for the company. It wasn’t until Ariyo started working full time at the company that he realized how difficult it was to raise the necessary funds.
He said: “If we approach a bank to raise capital, we choose a portfolio of these black owned businesses and there is already a problem of big banks not investing in these owners.”
Lendoe provided loans between $ 1,310 and $ 2,620 to its clients at the start. Her clients are mostly money-focused businesses like barbers or nail salons and are also often people of color, migrants, women, and businesses aged 8-21 months.
Prior to starting Lendoe, Ariyo ran AH Partners which he started after he and several other young adults bonded for his church.
“The church found itself in a situation where it had an expensive loan and, due to the recent incorporation of a new entity but not having the required track record, the banks were unwilling to refinance this. ready. The church building was about to be taken over because the loan repayments they had to pay were simply unsustainable, ”he told Love Jamii in an interview.
Her background in buying and selling bonds allowed her to create a private mini-bond to help the church. The waived obligation lowered their monthly repayments and gave the church some breathing space to bring them to a place where banks would lend.
“However, that time never came, so I restructured the bond and started using the interest payments we generated to issue micro-loans to others who approached me afterwards. to have found out what we had done for the church, ”he said.
When COVID-19 hit, many economies around the world suffered. Lendoe’s customers are among those massively affected. The pandemic has halted sales for many customers due to social distancing requirements.
As a result, Lendoe instituted a three-month payment holiday for anyone who had been directly affected by COVID. The team members also decided to forgo their salary during this time and volunteer for the company.
“We are focusing on our partner network, matching clients with funding from lenders in our partner network who have been accredited by the government to offer business interruption loans against the coronavirus. We will use the fees from this (paid by the government) to pay a commission to staff and donate to charity if we can, ”Ariyo told Love Jamii in April 2020.
According to the Hill Hub, Lendoe has disbursed nearly $ 1 million in loans to small and micro businesses in the UK’s most urban towns and is now able to solve the access to finance problem that many Small business owners in underserved communities face this.
The young entrepreneur has received numerous distinctions to date. According to his bio, he was named Top 25 Black Entrepreneurs to Watch by HSBC & UK Black Business Show and featured with Lendoe at Forbes in 2020 as one of the Black-Owned Businesses to Watch in 2021.