Frubana, the startup that functions as a marketplace for local food producers, has partnered with Accion and Mastercard to provide embedded financing solutions to retailers. The partnership will provide credit to more than 200,000 micro and small businesses, helping them meet their working capital needs and increase their financial capacity.
Frubana uses an alternative credit scoring system based on machine learning to accelerate the farm-to-table process for disadvantaged restaurateurs and their small-scale suppliers, including farmer cooperatives.
Originally operating in Colombia, Mexico and Brazil, since 2024, the company has solely focused on the Brazilian market, where access to working capital is one of the biggest pain points for local restaurateurs and the companies that supply them. Small-scale agriculture accounts for 77% of Brazil’s agricultural production, and more than 2.5 million small restaurants and food establishments source fruits, vegetables, meat and other products.
The startup — which was incubated at Y Combinator in 2019 — connects small restaurant owners with farmers, food processors and manufacturers, providing them with access to supplies, software and responsible credit. According to the company, this helps reduce operating costs, accelerate market transactions and increase revenue in an industry where many operators are unable to build a credit history.
The need for this new line of credit arises precisely from that quest to enter a formal banking system, something that has been denied mainly to small merchants: “Small restaurants in Brazil’s food sector are largely invisible to the financial system,” explained Juan Pablo Garcia, director of Frubana.
“Lenders often perceive them as high-risk customers due to their irregular cash flow and insufficient formal financial records. We seek to develop better payment and credit solutions for these small entrepreneurs to help them access credit that can drive the growth of their business,” said García.
Technology to provide personalized credit
Leveraging machine learning tools, Accion and Frubana developed a new algorithm based on alternative data attributes and its ability to predict the creditworthiness of entrepreneurs.
So far, Frubana has already issued 80,000 loans to date, is approving 8 out of 10 credit applications, and one-third of approved loans are being disbursed to customers new to credit and new to business. Meanwhile, the portfolio delinquency issue has been outstanding; nonaccrual loans are below the company’s expectations.
“Local restaurants and food-producing businesses, particularly those owned by women, have long been unable to access credit due to high costs and complicated credit application processes,” said Jonathan Blanco, Accion’s Senior Director of Digital Lending.
Frubana operates as a B2B online marketplace with a mission to become the “one-stop shop” for Latin America’s $100 billion food industry.
Through technology, it provides small and medium-sized restaurants with convenient access to all the product categories needed to run their businesses.
Finally, the partnership between Accion and the Mastercard Center for Inclusive Growth is signed for 8 years, and aims to help 23 million people in 25 countries benefit from the digital economy through a variety of programs.
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