International Finance
Featured Fintech

Start-up of the Week: Lulalend transforming SME finance in South Africa

Lulalend is a South African digital lender building a suite of products addressing the challenges faced by small and medium-sized enterprises in managing their finances

In 2023, Africa witnessed a surge in the domain called ‘Equity Funding,” with 75% of such investments being secured by fintech start-ups in the region. These firms, spanning categories including digital banking and payments, raised a cumulated USD 673 million, new data released by Afridigest, a media and information services platform focusing on the African continent, revealed.

In total, African fintech start-ups raised a total of USD 1.55 billion in capital in 2023, with 58% of that amount (USD 900 million) going towards equity financing.

In today’s episode of the “Start-up of the Week,” International Finance will talk about one such fintech venture called Lulalend, which is a South African digital lender building a suite of products addressing the challenges faced by small and medium-sized enterprises in managing their finances.

Knowing The Vision And Mission

Lula, as of April 2024, is offering instant access to funding, all-in-one business banking accounts, and cutting-edge financial analysis tools for small and medium enterprises in South Africa.

Lula believes that at the end of the day, the success of every business matters, cause each of these success stories comes along with more jobs, money, and widening financial opportunities for South Africans.

“We care about our family, our work, our community and our country. We love innovation and supporting businesses like yours, so that you can get back to doing what you love. We’re here to change the game, the norm, the world, because when we change something for the better, we change ourselves too,” the start-up remarked further.

Product Line-Up

Let’s start with Lula’s solutions in the domain of business banking. The “Business Banking Accounts” make it easy for South African businesses to stay on top of their finances with the start-up’s powerful cash flow manager, along with faster funding access and “support from real humans who care whenever you (the client businesses) need them.”

The “Business Banking Account” service has two categories: “Free Business Account” and “Unlimited Business Account.”

The “Free Business Account” has been tailored for start-ups and freelancers, with perks like 1.5% interest on the account balance, free physical card and virtual cards with unlimited free swipes, proactive support from both human banking executives and the cash flow manager called “Lulaflow.”

The “Free Business Account” works on the principle of being a pay-as-you-transact banking account that comes with all the bells and whistles to help the client businesses work smarter. And most importantly, businesses don’t need to pay monthly account fees.

The “Unlimited Business Account,” on the other hand, comes with unlimited and super-fast access to funding, with all clients’ EFTs (Electronic Fund Transfers) being free, apart from ensuring data support from Lula to help the businesses make informed strategic decisions.

Talking about the cash flow manager called “Lulaflow,” the solution helps businesses manage their financial calendar and build operational budgets in a better manner, apart from controlling the cash flow, staying up to date with important alerts and ensuring salary disbursal quickly and seamlessly.

We are talking about a cash flow management tool that provides tailored insights on business incomes, expenditures, and cash flow forecasts. The platform allows the business owner to sync all of his/her accounts, giving him/her a 360* view of the company’s entire cash flow, while taking into consideration factors like historic account behaviour for payables, scheduled payments, receivables (invoices issued), etc.

Lula also provides free bank cards that come with unlimited free swipes plus free delivery to the customers’ doorsteps. The card can be created virtually. If the user wants to freeze/unfreeze the product, that also can be done digitally. These cards do a wide range of payment-related functions, without hurting the user’s purse too much.

Unique Expertise In Business Funding

Lula also provides up to 5 million rands in business funding with a “Revolving Capital Facility” or “Capital Advance.”

“Apply in minutes and get funded, fast. No paperwork, no hidden fees, no branch visits. We use tech to make decisions based on the real-time performance of your business,” Lula remarked on its business funding solutions, which also don’t charge early repayment penalties.

The business funding solutions are of two types: “Revolving Capital Facility” and “Capital Advance.” The “Revolving Capital Facility” gives SMEs a flexible line of credit in case of unexpected expenses/opportunities. The client business can withdraw capital whenever it needs it without having to reapply.

Next is “Lulalend Capital Advance,” which provides fast access to business funding with transparent costs and easy-to-understand terms.

Businesses can apply online for the fixed-term capital advance, without worrying about paperwork. They can also repay the amount early and start saving capital for their operational needs.

Speed and simplicity make “Lulalend Capital Advance” business-friendly, as once approved, the business owner will receive the funding and then repay over the agreed term, with fixed costs.

Lula also has a trade capital platform called “Lulapay,” where business owners get paid instantly while their customers get a “Buy Now, Pay Later Facility.”

“Lulapay” offers BNPL (Buy Now, Pay Later), with the additional feature for businesses to get their customers’ invoices settled immediately into their bank accounts. The customers get a timeline of up to six months to repay. Last but not least, “Lulapay” doesn’t charge joining, account and monthly fees.

Lulalend In News

Lulalend was nominated for the “Fintech of the Year” category at the African Banker Awards 2023. The awards, which take place during the annual meetings of the African Development Bank, are known for recognising exceptional individuals and organisations driving the continent’s rapidly transforming financial services sector.

Lulalend got shortlisted for their work improving access to working capital for small businesses across South Africa. In the same year, the Cape Town-based business raised USD 35 million in a Series B round led by international impact investor Lightrock, with participation from new investors, including the German development finance institution DEG, Triodos Investment Management and Women’s World Banking, alongside lead investors from its USD 6.5 million Series A round: The International Finance Corporation (IFC) and Quona Capital.

Analysts saw it as an important development, as across Africa, access to credit remains limited for many small businesses, due to factors like the ventures’ inability to pay collateral, lack of credit history, unfavourable lending criteria and high interest rates. While banks and governments have tried to address this gap by implementing several loan initiatives, things are moving at a snail’s pace.

In South Africa, the annual SME credit gap in 2023 remained at about USD 20 billion, as per the International Finance Corporation. In that background, fintechs like Lulalend are pulling their weight by providing varied loans to underserved small and medium-sized businesses. SMEs want better, faster and simpler cash flow models and Lulalend has been proactive so far in delivering those desired solutions.

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