The global pandemic has been extremely challenging for most micro and small businesses. In the United States, the Federal Reserve estimates 200,000 small businesses closed during the first year of the pandemic, and in South Africa, nearly half of small businesses were forced to shut their doors. But for a few businesses, the pandemic has also presented new opportunities.
Outside of Santiago, Chile, an entrepreneurial young woman named Daniela Romero found a way to expand her business during the pandemic. During the day, Daniela works as a nurse technician. When COVID-19 hit, she found that many of her patients needed help purchasing medical supplies. She started to earn extra money delivering masks, antibacterial gel, and other supplies to patients unable to leave their homes.
Daniela realized that her side business could become something more permanent and substantial. “We saw other needs as the quarantines were put in place, so we added other items like pet food, work clothes, and things that people in the area were missing.” But as her sales increased and customer demand for more products rose, she didn’t have the capital to stock her store with more items. “It was a complicated moment,” she says. “I wasn’t banked. We didn’t have access to support from any direction. Banks didn’t recognize me as an entrepreneur or a professional or even a private citizen.”
Things changed when Daniela learned about RedCapital, a crowdfunding platform for micro and small businesses in Chile. “Thank God for RedCapital,” says Daniela. “I need credit on a regular basis. For example, a client will want something I don’t have, and the investment may be slightly higher than the cash I have on hand.” She filled out a simple application and received the credit she needed to buy inventory for her store, allowing her to make more sales and grow her business.
While the financing was critical, the relationship with RedCapital is more important to Daniela. She says, “It is really an issue of trust. To be able to count on someone who has confidence in you, that believes you are working hard and that you will be able to pay. It feels good.” After finding a solution to her cashflow problem, she looks forward to her future as a small business owner, saying, “I am motivated to support the community and see the opportunity for my business.”
Since working with RedCapital, she has recommended the service to her friends. “When you have a business, things always come up, so it is extremely important to have support. RedCapital is my support.”
In partnership with Metlife Foundation, Accion has supported the fintech RedCapital to develop a digital credit product focused on the financial health of microentrepreneurs. When entrepreneurs can get the funding and support they need, they can grow their businesses and strengthen their communities.