Creating Opportunity Where It's Needed Most
A A A share

East Asia & the Pacific

Providing Affordable Loans to to Micro Businesses in Indonesia

The thought of owning her own business and making considerable profit never crossed Nur Utami’s mind. But six months ago she managed to open a binding business at her home. Nur Utami is one of over 50 million of micro, small and medium enterprises in Indonesia. However, she immediately faced a significant problem: she didn’t have enough money to buy the equipment she needed to run the business efficiently.

Thanks to an unsecured micro loan from Bank Sahabat she received $400 within a week, which she used to buy a binding machine.


“The timing was perfect!” said Nur Utami. “With the loan from Bank Sahabat, I could buy my own binding equipment, increase my income, and start saving proceeds from my business.”


In Indonesia, close to 80 percent of micro, small and medium enterprises are underfinanced and often lack basic banking services. One of the key obstacles is that retail banks require collaterals to secure loans.


IFC’s Access to Finance program in Indonesia is helping to fill the gap by supporting Bank Sahabat Purba Danarta, a retail bank that focuses on microfinance, in developing unsecured loans specifically for Indonesia’s micro, small and medium businesses. Bank Sahabat targets enterprises with a stable income stream and accepts household items or business inventories as soft, unregistered collaterals.


Learning from best practices to create impact


The project also provides Bank Sahabat opportunities to improve its business model by learning from microfinance operations globally, such as Card Bank, a microfinance bank in the Philippines. Bank Sahabat adopted their micro group loan model where loans are extended to a group of business people.


“To develop our microfinance operation, the most important step for us is to learn from successful implementation globally, and this is the reason why we partnered with IFC,” says Franky Suhenda, President Director Bank Sahabat Purba Danarta.


IFC’s advisory services for Bank Sahabat is expected to reach 174,000 borrowers by the end of 2010, and within less than two years it has already reached 36 percent of the targeted 64,000 borrowers – 45 percent of those are women.

Stay Connected