There are times when the need for extra cash arises due to unexpected factors, such as a sudden increase in the prices of food and fuels or services like education and healthcare.

Through its mobile app on Android phones, Tala Philippines provides instant and accessible loans so that hardworking Filipinos can sustain their basic needs or small businesses, and achieve their dreams for more comfortable lives.

Tala Philippines general manager Moritz Gastl said the financial inclusion firm aims to reach more Filipinos in the provinces for aid and literacy, building on the trust the company has established in its 3.5 million clients since it started operations eight years ago.

“The Philippines is a key market. We realized that its underserved population is massive or around 60 to 70 million people,” Gastl told Daily Tribune in a recent interview.

Tala Philippines has distributed P110 billion to borrowers, including house helpers, drivers, teachers and small entrepreneurs at public markets.

“It speaks to the fact that the market we’re serving needs financing,” Gastl said. He shared that the firm has been visiting business hubs in the countryside like those in Iloilo and Davao but also farther communities where traditional banks are non-existent.

“It includes everyone that cannot access financing through traditional channels, so it’s not just the ones at the bottom but everyone in between the top and bottom,” Gastl said.

He shared that over 50 percent of the global population seeks accessible and affordable loans.

In the medium term, Gastl said Tala Philippines and its sister companies in Mexico, Kenya and Peru aim to increase clients to 40 million.

Founded in 2014 by Shivani Siroya, Tala first operated in Kenya to ensure financial access to countries with huge underserved populations but have growing sources of income and users of smartphones.

Tala’s Global Impact Report for 2022 reveals that 63 percent of its survey respondents said they received their first digital loans through Tala during that year.

Globally, Tala has lent $6 billion or P350 billion and has surpassed its 10-million mark for total clients.

“In the next three years, I want us to be the go-to solution for accessible loans to individuals and small enterprises,” Gastl said.

Smart analytics

Tala lends small amounts like P3,000 up to P25,000 after borrowers submit only one government-issued ID and answer simple questions.

Gastl said Tala continues to enhance its data analytics which covers information beyond borrowers’ monthly incomes and expenses, such as utility and phone bills.

“Over the last 10 years, we’ve built an algorithm,” Gastl said.

“We get a lot of data from customers. For example, we ask what kind of device you have or where you are located. We can instantly say if you’re eligible for a loan,” he added.

Gastl said these kinds of information allow Tala to gauge borrowers’ financial capacities more accurately.

Flexible terms on loans

Gastl said borrowers can repay loans in up to 61 days or three months.

Due to its smart data analytics, he said Tala has achieved a 94 percent repayment rate.

However, beyond the hard numbers on the borrowers’ finances, Gastl said Tala strives to understand clients’ financial behaviors and ways by which small entrepreneurs operate their businesses to ensure sustainable lending.

“It’s about building relationships. You give the customers what they expect but when they run into trouble, you give them flexibility,” Gastl said.

He shared that some clients pay back 30 days later under a restructured payment term.

Gastl said borrowers, such as app-based drivers, sometimes run short of cash due to inflation which especially accelerated for several months after the pandemic.

“We lend to support Grab drivers who are very hardworking. We help pay for their children’s education, buy them school supplies,” Gastl said.

“Inflation is still quite high in the Philippines and our market is growing to catch up with inflation,” he added.

Others like small store owners, he said, had to repay previous loans from informal lenders. Gastl stressed talking directly to potential borrowers, including those at public markets, has been helping Tala design their policies and financial literacy programs.

He shared that an entrepreneur at Meycauayan Public Market in Bulacan needs cash every week to purchase goods from another market. “It’s about finding use cases,” Gastl said.

Despite some delayed payments, he said Tala’s non-performing loans ratio has been very manageable as the firm sticks to the rule as much as possible.

Tala does not extend loans to existing borrowers who fail to fulfill their obligations.

“Occasionally, some tell us they can’t pay us back. But that tends to be a lot fewer people than we think. Filipinos honor what they say,” Gastl said.

To help Filipinos reach their dreams, he said Tala increases credit to loyal borrowers.

“We are a mission-driven business. We’re not going into a business with a truck driver with the expectation of a default, of course. But it’s to support them in their financial journey,” Gastl said.

To ease loan repayment, Tala partnered with the country’s biggest e-wallet firms, Bayad centers and pawnshops.

Financial guidance

Tala conducts financial literacy on its online platforms and physical conversations with potential borrowers in communities and business centers.

“We’re doing financial education, especially for those who need emergency loans,” Gastl said.

He said Tala aims to help Filipinos prevent piled-up loans from various types of lenders.

“We don’t necessarily know if someone borrowed from others in the country. Obviously, there are credit information bureaus but there are also many informal lenders like at public markets,” Gastl said.

According to Tala’s Global Impact Report for 2022, most Tala borrowers, or 80 percent said they improved their abilities to face major expenses and 77 percent shared they had better financial management.

Similarly, 76 percent said their quality of life improved due to Tala’s financial support and 63 percent felt lower financial stress.