A new Stellenbosch-based specialist on-line lending firm Pollen – targeting small to medium enterprises (SMEs) – appears to be tapping a very lucrative niche. Pollen is the brain-child of Louis du Plessis, who has the backing of his older brother JP du Plessis and banking legend GT Ferreira via the Anglo African Group. Anglo African is a well known financier in the wine sector, and once even made a bid to takeover Paarl-based liquor company KWV way back in 2002.
Pollen has hit the ground running with the Du Plessis brothers’ initial target of building a loan book of R20m in its first year of operation being easily surpassed. In its first year of operation Pollen wrote loans worth R150m – of which a staggering 70% was repeat business.
Pollen chairman JP du Plessis pointed out that internationally the online marketplace where small businesses can secure loans is an enormous industry with tech-orientated companies such as the New York Stock Exchange-listed OnDeck and Moula in Australia transforming the financial services landscape. He said Pollen was “first out of the gate” in South Africa in a market that might be worth as much as R189bn.
Louis du Plessis said the interesting thing was that South Africa was way ahead of the global market in terms of online personal loans.
“Think of Wonga and Capitec, for example, and the credit vetting software developed here. But it has lagged behind when it comes to unsecured business loans to the SME market.”
He said the SME business lending space was a sector traditionally under-served by South African banks. Louis du Plessis explained that the idea behind Pollen was to give entrepreneurs and SME business owners fast business loans via a revolutionary online application and vetting platform.
“Last year, we developed a tech platform to do credit vetting in a short amount of time, and which delivers business loans to SMEs within three days of the application process.”
He stressed Pollen knew the credit risks would be different in South Africa.
“We wanted to pilot Pollen for six months, to see average loan size and demand. A year later, we’ve done R150m worth of loans.”
JP du Plessis reckons next year Pollen could push its loan book to between R300m and R400m.
Pollen provides loans to small businesses with an annual turnover of R1m and over, up to medium-size companies with a turnover of R50m. Loans range from R50,000 to R1,5m.
“The reaction we’ve had has been overwhelming. It took us by surprise and it showed how the South African experience is echoing that of the US and Australia. There is a huge need in the South African SME market for what we have to offer.”
Louis du Plessis stresses that simplicity drove the Pollen offering.
The company’s website asks potential clients just three questions:
- Has the business been in operation for at least a year?
- Does the business have a minimum turnover of R1m a year?
- Does it have a successful business lease history and is the rent up to date?
Louis Du Plessis said Pollen charged a flat 25% on the loan, which is paid off over six months in weekly instalments.
“If you loan R100,000, you repay R125,000. There are no fluctuations; nothing changes with interest rates. It doesn’t matter if you’re a big client or a small one, it’s still 25% − this is the internationally accepted norm.”
JP du Plessis argued that too often businesses had no other choice than to let excellent opportunities slip through their fingers due to a lack of quick and easy funding.
In its first year of operation Pollen has made loans to businesses in a variety of sectors – ranging from retail and franchises to manufacturing businesses and the service industry. Louis du Plessis said that one of the biggest challenges in the set-up phase was dealing with the volumes.
“We didn’t expect the volumes; they were higher than anticipated. But we had Anglo African’s backbone to help pull in the people we needed. We are now ready and poised to go big – really big.”