Jakarta. The Financial Services Authority (OJK) recently announced that they were mulling raising the online loan limit to Rp 10 billion (around $616,693). This increase is expected to help Indonesian small businesses.

While this is great to help the country’s economic backbone, it’d be best for peer-to-peer (P2P) lending platforms to distribute these loans in phases once the Rp 10-billion cap is in place, according to the Indonesia Fintech Society (Amvesindo).

OJK is planning to allow P2P lending platforms to provide loans worth up to Rp 10 billion, marking a fivefold increase from the previous cap of Rp 2 billion. This is expected to improve financing access for Indonesian micro, small, and medium enterprises (MSMEs). 

Eddi Danusaputro, who is part of Amvesindo’s steering committee, said Monday that it would be better for the Rp 10 billion loan to go to the MSMEs’ hands in phases. In other words, MSMEs can start small before they can borrow more money. This should make it easier for these small businesses to pay off their loans.

“So once they finish paying off the Rp 1 billion debt, they can borrow Rp 2 billion, and this can continue to increase until it reaches the Rp 10 billion cap. So we don’t immediately go from Rp 2 billion to Rp 10 billion,” Eddi said on Monday.

According to Eddi, P2P lending platforms can help distribute the loans to MSMEs across the archipelago as today’s financing still heavily concentrates on a number of major cities in Java. 

The government data showed that MSMEs make up 61 percent of the country’s gross domestic product (GDP).

P2P lending to date has distributed around Rp 850 trillion in capital and customer credits since its inception a few years ago. While this is no small number, the outstanding loans amount to around Rp 60 trillion, according to Eddi. 

OJK data showed that P2P lending recorded a loss worth Rp 135.57 billion in January 2024, then went down to Rp 97.53 billion the following month. The industry’s loss also dropped to Rp 27.3 billion in March. According to OJK, the P2P lending fintech industry is forecast to book a profit in the second quarter of 2024.