SME financing gap ‘masssive’, exceeds SAR 300B: Lendo CEO

Osama AlRaee, CEO of Lendo Co.

Osama AlRaee, CEO of Lendo Co., said a “massive” financing gap is prevailing among small and medium-sized enterprises (SMEs) in Saudi Arabia, estimated at over SAR 300 billion, requiring major capital inflows from both local and international lenders.

In an interview with Argaam on the sidelines of an agreement signing between Lendo and JPMorgan Chase in Riyadh, AlRaee explained that the Financial Sector Development Program aims to ramp up SME financing from 4% in 2018 to 20% by 2030.

SME financing reached about SAR 250 billion in 2024, or roughly 8% of the program’s target.

AlRaee noted there is a great opportunity for growth in SME financing to meet and exceed the program’s goals, pointing to countries that have achieved higher financing ratios in this field.

Lendo, a Saudi-based debt crowdfunding platform, secured a $690 million (SAR 2.6 billion) facility led by JPMorgan. This marked the first-of-its-kind collaboration with a global bank to finance SMEs in the Kingdom, according to AlRaee.

He expected Lendo’s financing portfolio to surpass SAR 3 billion in 2025, with an eye to double this figure on an annual basis through the next five years to in order to amount to nearly SAR 30 billion.

The average profit margin of Lendo’s financing portfolio amount to roughly 15%, allowing the company to lower borrowing costs for clients, especially after partnering with JPMorgan, which did not impose a minimum profit margin when securing the aforementioned credit facility, the CEO stated.

JPMorgan’s partnership would help pivot Lendo’s lending investor structure, with individual investors making up 70% while banks and funds accounting for the remaining 30%. Individual investors are poised to represent 50% of the total soon, the top executive underlined.

He pointed out that the default rate in SME financing averages 7-8%, while Lendo’s default rate has been around 1% over the past five years, emphasizing strong risk management as a key factor in JPMorgan’s decision to partner with Lendo.