The fee is paid by the entrepreneurs as a percentage of each project funded. It covers the cost of transferring funds (credit card and other payment transfer fees, Fx margin we pay when transferring funds internationally) and administering the platform (web hosting, phone and SMS communications with entrepreneurs, etc). At our current scale we are just breaking even with our operating costs covered by the 5% fee.

The 5% fee does not take away from the loan funds, which are kept separate from operating costs and fees.

For comparison, most traditional microlending programs charge over 20% in fees and interest, and comparable unsecured small business loans in the markets we serve are much more expensive, or not available at all. Since the entrepreneurs are acquiring assets and operating capital they could not otherwise afford and which continue to generate profits after the loan is repaid, the value to them is normally far higher than the 5% cost of the loan.

Here is an aggregator of project updates posted by the entrepreneurs, which gives an idea of the impact of the loans: https://www.zidisha.org/project-updates