The difficulty for those entrepreneurs, however, is gaining access to the capital to build up their stock and serve their new, enlarged audience. Though Bangladesh has an established microloan system — loans specifically for small entrepreneurs in less developed economies — it’s hampered by cumbersome assessment processes and high interest rates.
That’s where Afeef Zaman, Siffat Sarwar and Ataur Chowdhury come in.
The trio of twenty-somethings have created ShopUp, a platform designed to automate the credit assessment process for small business owners, cutting wait times by weeks and reducing interest rates from 18-20 percent to 3-5 percent.
That also means slashing minimum loans from $2,500 to $300 and tie-in periods from one year to three months — a major win for fledgling entrepreneurs with less money to commit.
“The problem was not with default rates,” 26-year-old Zaman told CNBC Make It. In fact, microlenders enjoy some of the lowest default rates in the world. BRAC, the world’s largest non-government development organization, enjoys a repayment rate of 98 percent.
“It’s that the existing methods for assessing microloans are too lengthy and costly, meaning many businesses struggle to get up and running” he said.
While ShopUp doesn’t provide the loans itself, its algorithms mean that more microlenders can assess more loans more quickly — something that Zaman described as such a “burning problem” for BRAC that they signed up to work with ShopUp in just 35 minutes.