Ivy League Grads Take On Lenders Charging 139% Rates in Mexico

  • Credijusto is backed by Chicago-based Victory Park Capital
  • Lender's customers have average annual revenue of just $48,000

Allan Apoj, a 26-year-old graduate of Brown University, said he couldn’t help asking himself one question during his stint working at a payday lender in Mexico City three years ago:

“How can this be legal?”

He was shocked by the interest rates the company charged small businesses, which are largely shunned by banks because they typically can’t come up with enough collateral. Loans from payday and microlender Compartamos SAB, for example, carry average rates of 139 percent. The experience motivated Apoj to team up with fellow Brown alum David Poritz to offer a cheaper alternative in a country where only about 7 percent of small- and medium-sized businesses get loans from traditional banks.

David Poritz, left, and Allan Apoj

Photographer: Jorge R. Ramirez via Credijusto

In April, the pair founded online lender Credijusto (Fair Credit), which uses an algorithm they developed to determine a company’s creditworthiness and what kind of interest rate to charge it. Credijusto is backed by Victory Park Capital, a Chicago-based firm that funded numerous startups focused on non-traditional lending, including Square Inc.’s merchant lending program and Kabbage Inc., which helps online merchants buy inventory.

Mexico City-based Credijusto plans to ramp up lending to $2 billion over the next five years, charging interest rates of 26 percent to 32 percent on its loans, Apoj said. While they’re higher than those charged by banks, they’re significantly lower than rates from payday lenders and microlenders.

“The banks still offer, for a lack of a better word, an archaic service to the clients,” Poritz, 27, said. “So we thought there’s an opportunity to create and bring together the best customer service, the most transparent lending practices with the best U.S. investors to solve this huge issue.”

Banks in Latin America’s second-biggest economy remain reluctant to lend even after Mexico passed laws more than two years ago to increase companies’ access to credit. Corporate lending in Mexico was equal to just 31 percent of the country’s gross domestic product in 2014, according to the World Bank. That trails even much smaller nations in the region like Costa Rica and Panama. Faced with limited options, three quarters of businesses in Mexico turned to their suppliers for financing last year.

Edelman, a communications firm that represents Victory Park, declined to comment on Credijusto. Mexico’s peso weakened 0.8 percent Friday to 18.4208 per dollar as of 11:26 a.m. in New York.

Apoj, who worked at Mexico City-based payday lender Lana Facil for six months, describes Credijusto as a social enterprise that’s seeking to bring about positive change in Mexico. It lends to businesses with average annual revenue of just $48,000.

“Providing access to companies and helping a business owner unlock their collateral -- and activate it by making it productive -- has a positive social impact,” Apoj said.

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