MFIs borrow from citizens – Newspaper Kommersant No. 216 (7417) dated 11/22/2022

Difficulties in attracting funding are forcing MFOs to use more actively the funds of individuals, including individual entrepreneurs (IEs). First of all, such sources are used by small companies that do not have the opportunity to turn to banks or issue bonds. However, citizens’ funds are quite expensive, up to 20% per annum, the circle of possible investors is limited and many of them in the current conditions prefer the reliability of bank deposits to high returns.

As Kommersant was told at the Lime-Zym microfinance company, in January-September it attracted 126.7 million rubles from individuals and individual entrepreneurs, which is 2.3 times more than at the beginning of the year. According to the reports, an almost two-fold increase in attraction from private investors since the beginning of the year was observed in the companies Bystrodengi and Jupiter 6, 1.4 times increased the volume of MFC Webbanker. “Access to foreign funding was limited, bank lending still remains a very limited funding channel for the sector. Therefore, companies began to reconsider the structure of their funding,” explains Lime-Zaim.

Funds from each source (bank loans, bonds, loans to individuals) have different purposes, Roman Makarov, CEO of Zaimer, notes: “Bank credit lines serve to cover short-term cash gaps during periods of intensive growth. The money raised under loan agreements is used to finance current loans. And long-term borrowings in the public debt market are needed to ensure new projects, technological improvement, and the planned increase in market share.”

However, it has become more expensive to raise borrowed funds on the open market, admits Ilya Soloviy, CFO of the online financial platform Webbankir. For example, in June 2022, the company placed bonds for 100 million rubles. with a coupon rate of 16.57% per annum. The entire book was signed within five working days. This year, according to the Bonds Lab resource, some issues of MFIs have been placed for two or three months, but the volume of attraction has not exceeded 50%, although rates have risen to 19-20%.

This is an expensive tool from the point of view of organizing the process, adds Artem Bykov, General Director of the MigCredit MFC. Place bonds for 10-50 million rubles. unprofitable, and with the release of 300-500 million rubles. (standard volume for the market) it is already “impossible to quickly dispose of the funds received,” notes Mr. Bykov.

Bank lending to the sector looks more profitable due to lower rates, but it is limited to only a few credit institutions. “And the companies themselves are not ready to increase lending at the same pace as they did in the first half of the year. At that time, the volume of disbursements could grow by 1.5–2 times compared to the previous year. Now the growth is much more modest, at the level of 10-20%. Accordingly, less financial income is needed, ”explains Mr. Soloviy.

According to IC Ivolga-Capital, this year the rates on loans from individuals ranged from 11% to 25% per annum. They are aimed at people “who are interested in obtaining a higher return than bank deposits,” says Anton Khrapykin, head of investor relations at the IDF Eurasia fintech group.

Citizens can invest in MFIs both under a loan agreement and through high-yield bonds. However, if the first option is available to all individuals with savings of 1.5 million rubles, then the second is intended for qualified investors, Mr. Makarov clarifies. And even among this audience, Mr. Soloviy adds, there are those who, against the backdrop of an unstable financial situation, transfer funds to bank deposits, because they are protected by the DIA.

Polina Trifonova