Saudi’s Foodics expands into micro-lending to offer working capital to F&B SMEs in country

Foodics, a Saudi tech startup that offers restaurant management solutions is expanding into lending with the launch of Foodics Capital, its $100 million micro-lending arm that will offer what it says will be Shariah-compliant loans to small F&B businesses.

The startup said that it has partnered with local Shariah-compliant consumer and SME financing provider Maalem Finance to launch the offering. It also said that it has raised the entire $100 million to offer the loans. What this means is that Foodics has received a $100 million commitment from Maalem Finance for the loans.

Foodics Capital has already received the approval of the Saudi Arabian Monetary Authority (SAMA) and is able to extend loans starting from $5,000 (SAR 18,750) going up to $133,000 (SAR 500,000). This range means that the offering goes beyond micro-lending.

The initial approval of the loans can be granted in as little as 24 hours and the final approval, Foodics said, could take up to 7 days. The payback period for the loans will be up to 18 months and the fee will be 6 percent of the loan amount, Foodics told MENAbytes, adding the startup will receive the loan amount by deducting a percentage from the credit and debit card payments of the businesses (as Foodics will also be handling payments of these businesses).

In the first phase, Foodics will be extending loans to its existing customers who it says are pre-qualified. The offering will later be rolled out more widely across the Kingdom before the end of the year.

As Foodics has all the transactional data of restaurants that use its platform, it will be in a great position to assess credit risk. But even in case of loan defaults, Foodics will not lose any money, the startup has told us. Their arrangement with Maalem works in a way that its Maalem who will lose money in case a loan recipient fails to pay the money back.

Ahmad Al-Zaini, the co-founder and CEO of Foodics, commenting on the occasion, said, “With cash flow being a critical pain point for small business owners right now, we wanted to be able to offer them a one stop shop that also covers their finance needs and enables them to accelerate their growth rate.”

He also said that a finance offering was always part of their vision to be able to offer a one-stop platform for owners to manage their businesses, “Foodics is very proud to now allow merchants to finance their working capital by giving them access to Shariah-compliant microloans through Foodics Capital, staying true to our objective of always bringing more value to our customers and making their lives easier.”

Foodics’ CFO Abdullah Tahboub said, “This fund is set to revolutionize SME lending, as it will enable faster and more flexible lending than most of the lending facilities in the region.”

The Saudi startup has its solutions being used by over 10,000 F&B outlets across Saudi, UAE, and Egypt (where it expanded last month). It has told us that it plans to offer loans to merchants beyond F&B operators in the future.

(Updated with details about the cost of loans and payback period).