The concept of “social business” was created by 2006 Nobel Peace Prize winner Professor Muhammed Yunus. It refers to a non-dividend business which aim is to solve a social problem. Profits are fully reinvested to support the activity of the business. However the investors can, in time, withdraw their participation. Babyoan's founders chose to create a social business as they wanted to develop a financially self-sustainable structure which will not depend on benefactors.

 

A limited company with tailored statutes


Babyloan is all about implanting a social purpose within economic concerns. When drawing up our statutes, Babyloan – established as a Société par Actions Simplifiée (limited liability company) – committed to respecting three fundamental principles:

  • limited profitability: profits are re-injected to assist the business in achieving its social objectives, and there is minimal redistribution of any profits to shareholders.
  • staff inclusion in shareholding, in other words a governance in the hands of institutional investors and shareholding NGOs.
  • salary framing with a maximum ratio of 1 to 5 between the lowest and highest salaries.
     

In June 2011, Babyloan received the Entreprise Solidaire ("socially responsible company") approval by the authorities in the Hauts-de-Seine department of France. This status distinguishes businesses whose shares may not be traded on regulated markets, and which fulfil certain criteria regarding employee recruitment and wages.

The financial model of our social business


Babyloan’s revenue is generated through the contributions from our community of lenders for each transaction made, through the services we offer to businesses, and through the management fees charged to our MFI partners.
>>Browse our 2014 Annual Report

 

  • Lenders fees. 100% of the loans made on the website are transferred to the micro-entrepreneur whose project is being financed. No funds are deducted and used as part of our financing structure. As such, it is the additional fee made by the lender when the transaction is carried out using our platform that makes up nearly 50% of our revenue.
  • MFI partners management fees. We provide a low-cost source of financing to our field partners, the Microfinance Institutions. This generates 20% of our revenue.
  • Business partnerships invoicing. We propose a range of business offers which have proven to be attractive mobilisation tools for those wishing to develop more innovative corporate social responsibility initiatives. The fees charged for these services make up 18% of our annual revenue.
  • Other revenue. Additional streams of revenue are linked to public subsidies, revenue from our fund (“Babyfund”) and other fees we charge which together make up 12% of our income.