Revving up financial inclusion in El Salvador
Meet a Salvadoran fintech company offering same-day financing for motorcycles
Read this story in Spanish here.
By Natalie Alm, INVEST Strategic Communications Advisor
It used to take Andrea Mendoza two hours on public transportation to get from her home to the restaurant in San Salvador where she works as a waitress. She wanted a motorcycle to get there faster, but couldn’t afford the first loan payment.
Besides being a primary means of transportation, motorcycles are also an important source of income, especially for unbanked populations in El Salvador. As of 2021, only around 35% of Salvadorans had an account with a bank or financial service provider, and access to finance is especially challenging in rural areas.
Enter Flexiplan, a fintech company that is working to bridge this gap by providing same-day financing for motorcycles in El Salvador. Co-founder and current CEO Tito Gutiérrez Ávila launched the company in 2016 after more than a decade working in the motorcycle industry. “We recognized that unbanked populations in El Salvador were potential users in our sector and saw an opportunity not just to originate a loan but to achieve financial inclusion and improve quality of life for the base of the pyramid,” he says.
Access to finance is out of reach for most of Flexiplan’s clients, half of whom live outside main cities and 75% make less than the $800 monthly wage required to access credit from financial institutions. Now a potential customer can go to one of 300 points of sale around El Salvador — in both cities and rural areas — to file an application, which is sent to Flexiplan’s central office in San Salvador. Using their proprietary algorithm, Flexiplan can reach an approval in less than 3 seconds, and the client can drive their new motorcycle away within hours. Payments are tailored to the customer’s salaries and can be paid biweekly or monthly, and interest rates are some of the lowest around. Customers remain in Flexiplan’s network, able to communicate about the loan through WhatsApp throughout their loan period.
USAID’s support
In 2022, Flexiplan had grown significantly. It was projected to approve 20,000 loans from 2021 to 2024, a 300% growth rate. Tito and his team saw ample room for continued growth but needed additional investment. Luckily, they were a great fit for USAID’s Investment Facilitation El Salvador (IFES) initiative, which aimed to mobilize private investments to small and growing businesses in El Salvador.
Through IFES, the advisory firm CrossBoundary, in partnership with local firms Innbox and SandBox, provided Flexiplan and 11 other companies with transaction advisory services to help them become investment ready. The team worked with Flexiplan on financial modeling, due diligence, marketing, and investor outreach.
CrossBoundary Senior Associate Loïc Porte notes, “What made Flexiplan stand out, both to CrossBoundary and to investors, was the combination of its impact story and the company’s excellence in executing its business model.” According to Porte, while most consider unbanked populations a risky segment of the population to serve, Flexiplan has a strong risk management approach. It is one of few financial institutions that can provide services to those underserved groups without high default rates, thanks to its sophisticated credit model.
Investment in impact
As a result of the support, Flexiplan raised almost $3 million from private investors and commercial banks. USAID’s support was also instrumental for Flexiplan to meet the U.S. International Development Finance Corporation’s (DFC) rigorous due diligence requirements to obtain a $6 million loan, which will finance the company’s growth in El Salvador and expansion to other regional markets in Northern Central America. $1 million of the DFC loan will be dedicated to financing electric motorcycles, allowing Flexiplan to enter the electric vehicle market and contributing to El Salvador’s net zero goals. The company expects to grow three to four times its current size in the next few years, allowing over 50,000 Salvadorans like Mendoza to access finance.
“Without the support from USAID and CrossBoundary, all of this would not be possible,” says Gutiérrez. “They helped us persevere, keep up the pace, and meet the often intense requirements of these new investors. Our company has learned a lot through this process, and we are stronger because of it.”
Almost 40% of Flexiplan’s customers are using their motorcycles for income-generating activities such as commuting to their jobs more easily, like Mendoza, or serving as delivery drivers. “Getting a motorcycle through Flexiplan has benefited me a lot,” she says, “because I get home faster — in 45 minutes, less than half the time — and have more time for things that are important to me, like being with my daughter and getting things done at home.”
By expanding access to affordable credit, Flexiplan’s expansion will improve financial inclusion, incomes, and quality of life for its customers for years to come.
