Politics, Business & Culture in the Americas

Business Innovator: Lenddo, United States and Colombia

Reading Time: 2 minutes

Virtual collateral: Lenddo co-founder Jeff Stewart in his New York City office. Photo: Ryan Dorsett

Reading Time: 2 minutes

Getting approval for a loan normally requires an extensive credit check to prove that the borrower is likely to pay it back. But in emerging markets across Latin America, even well-qualified, middle-class candidates often lack a credit history and bank accounts.

That is, until Lenddo burst onto the scene in 2011.

Founded by Jeff Stewart and Richard Eldridge, two American entrepreneurs in their early 40s, Lenddo is an online platform that allows the burgeoning middle classes in Latin America and Asia to use their social media connections to prove their creditworthiness. The New York City–based company has offices in Manila and Bogotá and hopes to expand. After starting several companies all over the world, Stewart and Eldridge were astonished to discover that some of their most trusted employees couldn’t get traditional loans, despite their professional achievements and education. “We had employees who would come to us asking for loans, and that didn’t make sense to us.” Stewart says. “We knew that they were really hard workers, very smart, educated, dedicated, and very employable[…]so we started digging into how we could help people on our team get access to credit.”

The two men decided that assessing creditworthiness needed an update for the digital age. Lenddo—which now has thousands of members in over 35 countries—uses an algorithm developed by Dr. Naveen Agnihotri, Lenddo’s chief scientist, to assess the creditworthiness of applicants based on their social network contacts.

Using traditional microfinance loans as a guide, members of Lenddo can use Facebook, LinkedIn, Twitter, and Yahoo! to build a virtual community of Trusted Connections comprising friends, relatives or references who can vouch for their financial trustworthiness. When applying for a loan, aspiring borrowers list their Trusted Connections instead of listing potential collateral or demonstrating a credit history. In the application they create their own Lenddo profile by providing basic personal and contact information and access to their other social media profiles. The entire process, from signing up for membership to applying for a loan, is completely free for users.

After selecting their references, users can apply through Lenddo’s website for small loans—usually amounting to one month’s salary—to further their education or the education of a close family member, to pay for health care or home improvement, or to open a small business. As borrowers pay back their loans at a competitive interest rate—usually within three to twelve months—their Trusted Connections can see the loan repayment activity.

Stewart and Eldridge acknowledge that Lenddo’s success wouldn’t have been possible without the help of their own social networks. With their business connections, they were able to secure over $8 million in investment from institutional investors such as Accel Partners, Blumberg Capital, Omidyar Network, iNovia Capital, and Metamorphic Ventures, as well as with individual investors knowledgeable about Latin America and social networks. “We wanted investors who could not only validate our idea but give us feedback,” Stewart says.

Their gamble paid off. With a repayment rate above 95 percent—roughly equivalent to other microfinance loans—Lenddo’s founders have their sights set on Mexico, Brazil and Peru. Explains Stewart, “What we’re trying to do is give people more flexibility and access to capital so that they can invest in themselves and they can invest in their families.”


Leani García is social media and production editor of Americas Quarterly and policy manager for Americas Society/Council of the Americas. Follow her on Twitter @LeaniGarcia.

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