TechInAsia | GandengTangan uses ‘crowdlending’ to get charitable donors reimbursed in Indonesia – Crowdfunding’s popularity is growing in Southeast Asia. In countries like Indonesia, Kickstarter and Indiegogo have made their marks, but there are also several other names vying for a piece of the pie. Those interested in Indonesian crowdfunding players are sure to stumble across sites like KitaBisa, Wujudkan, and Crowdtivate. However, those who are looking to back social initiatives and good causes on a more consistent basis, and without breaking the bank, will need a different kind of platform.

Additionally, it’s becoming increasingly difficult to gather charitable donations. With sites like Kickstarter, backers don’t get a financial return, but instead receive other types of rewards and compensation. This is an opportunity that Indonesian entrepreneurs Jezzie Setiawan and Nur Roni Dinnurohman are hoping to capitalize on with their new crowdfunding site GandengTangan (which translates to English as ‘Holding Hands’). Dinnurohman serves as GandengTangan’s chief technology officer, while Setiawan is the CEO, and has a background as a credit and financial analyst.

GandengTangan is not a crowdfunding site per se, but rather a “crowdlending” site, according to Setiawan and Dinnurohman. The firm, which just launched yesterday, is intended for good-cause businesses owners in need of capital. Unlike traditional crowdfunding, GandengTangan users are reimbursed as the business grows. In this way, donors can see exactly how their funds are being spent, how the company is performing, and even overcome the initial hesitance to give money, as financial payback is guaranteed. The added benefit for lenders is that, in theory, they can continuously enable good causes to thrive without actually risking a financial loss.

Flexible payments with lender protection

The social entrepreneurs who want to create a campaign on GandengTangan are required to submit a detailed proposal in advance. There are several boxes that must be checked in order for a project to appear on the site. First, the startup idea must be based on social entrepreneurship or a good-cause business. The concept must have a clear business model and way to make money. The business must have at least six months of operations under its belt. And it must not be anywhere close to bankruptcy.

If the proposal is accepted after GandengTangan’s screening process, the potential borrower can launch their project and start their fundraising campaign at a maximum duration of 45 days. The business owner will not be charged interest on the loans they receive and no collateral is involved on GandengTangan.

GandengTangan plans to monetize by taking five percent of the total loan. In addition, the borrower must set up an auto-debit option on their company’s bank account, directly linked to the lenders, to ensure loan installments are paid off as the business starts generating profit.

To ensure that projects are actually running and that social entrepreneurs will be able to repay the loans, Setiawan says that the scope of each project must be approved by a credible authority. One of these authorities could be the government, for example, or a well-established non-governmental organization.

Based on merit, borrowers who object to the repayment terms may have the option to increase the loan term or decrease the amount of each installment payment. If borrowers still can’t repay the loans at that point, the the business’s assets are liquidated to repay the backers. If in the end, the liquidated assets still don’t equate to to the amount given by the lender, then the credible authority which approved the business in the first place becomes responsible for the debt.

High hopes for user acquisition

Folks interested in offering loans on GandengTangan must first register, then perform a refundable test deposit with the minimum of Rp 50,000 (US$3.79) to affirm their legitimacy. GandengTangan adds an element of gamification, as backers get rewards from the site each time they make a donation. However, this should not serve as the main motivation for backers to lend, according to the startup.

GandengTangan officially launched on Sunday, so its still premature to analyze the company based on market traction or the dollar amount of loans facilitated so far. However, in the next two years, Setiawan says GandengTangan should be able to acquire 120 to 160 borrowers and 17,000 donors in Indonesia.

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