Pintek, an Indonesian fintech platform that provides loans to students, on Monday announced that it raised USD 21 million in debt funding from US-based private-debt investor Accial Capital. The company will use the new ammunition to grow its reach in 2021.

“We plan to deepen our partnerships across the ecosystem with educational institutions, suppliers, edtech players, and others to reach more and more students,” co-founder and director Ioann Fainsilber told KrASIA. The company is furthermore waiting for regulatory approval to launch sharia-based products.

Pintek underwrites student loans and splits payments into more frequent and smaller parts to make tuition fees more affordable. Most of the customers are first-time borrowers with no credit history. Right now, Pintek’s operation is reaching students in 26 of the nation’s 34 provinces. The company said it has partnered with edtech platforms to provide schools with financing and access to remote learning programs, to help ease the transition to online learning.

Fainsilber said that throughout 2020, his company managed to almost triple its loan disbursements. During that period, Pintek found through an internal survey that parents feared they wouldn’t be able to cover their children’s tuition fees, due to mass layoffs or salary cuts. Online lending platforms became an alternative source of money to pay for their children’s education.

In December 2020, Pintek bagged USD 5 million in a funding round led by Finch Capital, with participation from existing investor Accion Venture Lab. Since 2018, Pintek has partnered with close to 100 education institutions. It is registered and supervised by Indonesia’s Financial Services Authority (OJK).

A small, yet growing sector

Bhima Yudhistira Adhinegara of the Institute for Development of Economics and Finance said that in 2021, the Indonesian fintech lending sector’s growth could double compared to 2020. Personal consumption loans will still be the major driving force, as Indonesians are still suffering from job loss and reduced salaries due to COVID-19.

“Since banks tend to be very careful in approving this kind of loans, P2P lending becomes the only available source. The process is faster and requirements are not as tight as with banks,” he said.

It includes niche sectors like the one for educational loans. Although still relatively small, it has large potential for Adhinegara. Aside from tuition fees, nationwide distance-learning measure have forced parents to buy new gadgets and increase internet data plans. “The loan will be used for that as well, and applications will increase,” he said.

Pintek is competing with platforms such as DanaDidik and Cicil. SME-focused P2P fintech lender KoinWorks has also tapped the sector through its KoinPintar program.