How Demi Ariyo started a lender that has disbursed close to $1m to ‘underestimated’ businesses

Black founders face extreme challenges in raising funds to expand their business operations. According to data from ThinCats, half of small businesses get rejected when they apply for finance for the first time and the situation is more pronounced among Black-owned businesses.

To help Black startups to overcome these challenges, Demi Ariyo, founded Lendoe, a UK-based lender to assist Black and ethnic minority early-stage entrepreneurs.

“Black and ethnic minority entrepreneurs are too scared to approach the banks … their companies need finance, but because they feel they are going to be discriminated against or turned down, they don’t attempt it,” he told Business Insider.

Ariyo started Lendoe in 2017 as a side hustle and in 2019, began working full-time on the firm. It was not until Ariyo started working full-time on the firm that he realized how difficult it was to raise the necessary funding.

He said, “If we approach a bank to raise capital, we go with a portfolio of these businesses that are Black-owned and there is already a problem of big banks not investing in these owners.”

Lendoe provided loans of between $1,310 and $2,620 to clients when it started. Its clients are mostly into cash-centric businesses like barbers or nail salons and are also often people of color, migrants, women and businesses between 8-21 months old.

Before starting Lendoe, Ariyo was running AH Partners which he launched after he and several other young adults raised a bond for his church.

“The church found themselves in a situation where they had an expensive loan and, due to recently incorporating a new entity but not having the required track record, the banks were unwilling to refinance this loan. The church building was about to be repossessed because the loan payments they were required to pay were simply unsustainable,” he told Love Jamii in an interview.

His experience in buying and selling bonds allowed him to create a private, mini-bond to assist the church. The bond raised decreased their monthly repayments and bought the church some breathing room to get them to a place where the banks would agree to lend.

“However, this time never came, so I restructured the bond and began using the interest payments we were generating to issue micro-loans to others who approached me after they found out what we had done for the church,” he said.

When COVID-19 hit, many economies across the world suffered. One of those who were massively affected were the customers of Lendoe. The pandemic halted sales for many clients due to social distancing requirements.

As a result, Lendoe initiated a three-month payment holiday for all those who had been directly impacted by COVID. Members of the team also decided to forgo their salaries during this time and volunteer for the company.

“We’re focusing on our partner network, matching clients with funding from lenders in our partner network who’ve been accredited by the Government to offer Coronavirus Business Interruption Loans. We will use the fees from this (paid for by the government) to pay commission to staff and donate to charities if we can,” Ariyo told Love Jamii in April 2020.

According to the Hill Hub, Lendoe has disbursed close to $1 million in loans to small and micro-businesses within the UK’s most urban cities and is now in line to solve the access to finance problem many small business owners from underserved communities face.

The young entrepreneur has so far received numerous recognitions. According to his bio, he has been named Top 25 Black Entrepreneurs to Watch by HSBC & UK Black Business Show and featured with Lendoe in Forbes in 2020, as one of the black owned businesses to watch in 2021.