By Prince Osuagwu

LENDING startup, Payhippo, is widening credit access for small businesses in Nigeria, announced today that it raised $3 million in seed funding. The round was led by influential African fintech founders and financial leaders Ham Serunjogi and Maijid Moujaled, co-founders Chipper Cash, Olugbenga Agboola, founder Flutterwave, Bolaji Balogun, CEO Chapel Hill Denham, and Hakeem Belo-Osagie, Founder Metis Capital Partners. Other angel investors include management from Paystack, Brex, and Tala and several LPs from Payhippo’s preseed investors.

There are also institutional investors, including TEN13, VentureSouq, and Prodigio Capital.

A Y Combinator Summer 2021 cohort, Payhippo was founded in August 2019 by three co-founders, Zach Bijesse, CEO, Chioma Okotcha, COO, and Uche Nnadi, CTO. Having worked in fintech and lending organizations in Nigeria, the team had the vision to create an innovative lending product for small businesses in Africa.

Payhippo provides small businesses with access to credit in less than three hours to help business owners make investments needed for growth.

Payhippo said it has currently disbursed 5000 loans to small businesses across Nigeria. In September 2021, the company earned $64,000 in revenue from $900,000 disbursed. That gives it 25 percent monthly growth with a 97 percent repayment rate on loans. 

Small businesses play a significant role in most economies and contribute to job creation and global economic development. In Nigeria, small businesses account for 96 percent of companies, 84 percent of employment, and 48 percent of the national GDP. There are 40 million small businesses in Nigeria, and only a few have access to formal financing. This is a significant issue because, without working capital, companies are unable to invest and grow. Although most small businesses can be creditworthy, they however experience serious challenges accessing credit because they do not have credit scores.

Why Payhippo’s gestures may come handy to many of them is because traditional lenders’ collateral requirements are too high. For those businesses that get through the process, it can take up to three months to receive the funds. 

Payhippo is driving financial inclusion for small businesses by creating accessibility to financing. A business can apply for a loan through the company’s online platform by just providing business information.

Through their backend technology system, the Payhippo said it uses know your customer, KYC checks to verify the business’s cash flow data, business owner data, and industry data, all within a few minutes and disburses the loan within hours. 

Payhippo provides small businesses with short-term working capital with average loan amounts of $1300 and allows them to use the principal amount during the entire tenor, using the money to run their businesses entirely. Businesses then repay the whole loan at the end of the loan period. Small companies can then build their Payhippo score based on their track record. By repaying their loans on time, they become eligible for higher amounts of capital.

Co-founder and COO, Payhippo, Chioma Okotcha, said: “The funding will allow us to invest in hiring more engineers and data scientists. We aim to improve our technology and enhance our lending offerings as we continue to address the persistent financing gap for small businesses in Nigeria. At Payhippo, our vision is to provide millions of small businesses with sufficient and available capital to run and grow their businesses.”

Bolaji Balogun, Founder and CEO of Chapel Hill Denham said: “We’re excited at how Payhippo is using technology to provide SMEs in Africa with access to finance required to run their business needs. By lending to small businesses, Payhippo is allowing business owners access much needed working capital to grow their businesses and create much needed jobs in the economy.”

Ham Serunjogi, Cofounder and CEO of Chipper Cash, said: “New financial technologies are being developed and implemented changing the competitive landscape in the financial sector in Africa. Access to credit is a critical necessity for small businesses to manage their daily challenges. Payhippo helps address this need through its innovative approach that provides loans to small businesses in less than three hours enabling them to have access to sufficient working capital to grow.”