Small neighbourhood stores are vital to many communities across the globe, also in Mexico and Peru. They are not only an important source of employment, but they also play a key role in supplying food and essential household products to low-income households. One of the challenges these small stores face is lack of access to short-term credit to pay suppliers up front to buy inventory.

Tienda Pago, founded in 2015 and currently operating in Peru and Mexico, addresses this challenge by providing small store owners quick, short-term working capital to purchase inventory from top global fast-moving consumer goods distributors. It has developed a close-loop model in which the credit line is activated via an easy-to-use smart phone-based technology, allowing distributors to collect payments digitally, thereby reducing inefficiencies and operational costs. With this new facility provided by theTriodos financial inclusion funds, the company is expanding its product offering to serve other needs of store owners.

Store owners can use the short-term loans on demand, matching their inventory turnover and cash flow cycles requirements for up to 14 days. For example, a shop owner can take out a 4-day loan if there is a weekend event they need to stock up for. The average loan provided by Tienda Pago is less than USD 500 with a recurrence of three loans per month per client, which is not normally seen as profitable enough for other lenders.

Luis Ochoa, Tienda Pago´s CFO, highlights the company’s success and impact.  “With this new facility from Triodos, we can support our loan book growth trend as well as expand our product offering for stores and store owners. More than 70% of our clients have never used a credit line in their lifetime. After more than six years of operations, we´ve seen the positive impact of our services in store owners, helping them grow and improve their cash flow. Triodos´ loan recognises our efforts to support an underserved market and acknowledges the positive financial performance of Tienda Pago demonstrated throughout last year´s challenging environment.”

The benefits are clear. Agustin Zamora, Senior Investment Manager Latin America: “Small stores benefit by gaining access to formal commercial credit, allowing them to more efficiently manage their inventories, increase their sales and margins, and in many cases create and develop a formal credit history, which is key in expanding their business. Distributors see an increase in growth because small stores are no longer limited by the cash they have to spend, and they save on inefficient and expensive cash processing.”