Analysis of the Performance and Influence of Modalku on MSMEs during the COVID-19 Pandemic

Abstract

In today's digital era and the ease of technology, startup business in Indonesia is growing rapidly. The startup business seems to be the new prima donna in the business industry. Almost every year, maybe even every month there are many startup businesses of various types and circles in the technology field. At least until now there are thousands of local startups in Indonesia.Modalku is a financial technology (startup) company engaged in peer-to-peer lending and based in DKI Jakarta, Indonesia. Modalku is an online-based peer-to-peer (P2P) lending platform that brings together SMEs (Small and Medium Enterprises) who need capital and are creditworthy with lenders who want to find investment alternatives. Under the auspices of PT. Mitrausaha Indonesia Group, Modalku provides money loan distribution services based on financial information technology (Fintech). As a platform, Modalku acts as an intermediary between borrowers and lenders. Of course, not only as an intermediary, Modalku also manages and channels funds from lenders who act as investors to SMEs who need business capital.The COVID-19 outbreak has had a serious impact on almost all countries in the world, including Indonesia. The impact is not only in one area, but in almost all existing activities. One aspect of concern in the midst of the Coronavirus outbreak is investment. The existence of various restrictions in a country certainly has an impact on economic activity. As is well known, the COVID-19 condition has affected several MSME business sectors, including several MSMEs who have become borrowers in Modalku.A peer to peer (P2P) lending technology (fintech) company, Modalku, applies a number of responsible lending principles as a risk mitigation measure from the impact of the corona virus (COVID-19). Co-Founder & CEO of Modalku, Reynold Wijaya, said that this principle is the principle of Modalku's operation in assessing MSME borrowers and their financial ability to repay loans. Reynold said, the business growth strategy in the midst of the COVID-19 outbreak was very focused on Micro, Small and Medium Enterprises (MSMEs) and their networks. There are 3 steps that will be implemented in the future. First, Modalku will carry out a more comprehensive selection process for prospective borrowers and MSMEs who have become borrowers at Modalku. Second, Modalku will react more quickly to changes in macroeconomic conditions by adjusting the limit as well as the loan period (tenor). The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines. The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines. The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines.Modalku relies on its unique strengths when compared to other established financial industries. In contrast to banks which basically use their own funds to provide loans to borrowers, Modalku gives many investors the freedom to choose any business they want and invest in as much business as possible for a relatively small amount of money. Modalku has funded more than 45 activity loans, totaling more than US $ 900 000 and the amount is still growing. Small and Medium Businesses have become the backbone for the Indonesian Economy and of course this business model will greatly encourage Indonesia's economic growth. This kind of growth is primarily driven by helping SMEs easily access loans and grow their businesses.