YoFio Helps Micro Businesses Access Credit and Grow Inventory Through App’s AI-Powered Machine Vision Technology

Microbusinesses are the backbone of any economy, down to the community level. In Mexico, there are more than 4 million micro-enterprises, employing nearly half of the workforce and generating 14.6% of GDP. Most of these businesses are sole proprietorships, employ fewer than five employees, and transact primarily in cash. This, coupled with the fact that many microbusiness owners are unbanked, severely limits their access to financial services, especially to a line of credit for purchasing inventory and growing their businesses.

Most traditional financial institutions, such as banks, are hesitant to lend to micro-entrepreneurs due to the higher risk. As most micro-businesses deal almost entirely in cash, banks have no way to see their cash flow and to determine how much they sell. In many cases, even if the micro-entrepreneur has a bank account, they don't use it for business cash flow.

YoFio, a Mexico-based financial technology (fintech) company, has launched an app and credit line service that can help solve these problems for micro-entrepreneurs, especially addressing the lack of digital financial footprint. This financial footprint is crucial in determining how much the store sells, their expenses, and whether they're creditworthy or not. Traditional microfinance lenders usually send one of their staff to visit the store and do an inventory count, but this is inefficient, expensive, and time-consuming.

YoFio’s solution uses an AI-powered technology known as Machine Vision, which is also being used in many advanced industrial applications today. The technology analyzes photos and videos of the store and its inventory, either taken by the owner on their own or with the guidance of a YoFio analyst through a video call. The program estimates the store's inventory, and then calculates sales and other business health metrics. This creates a “digital twin” of the physical store, allowing YoFio to make a uniform credit decision without the need to physically visit the store. This reduces the time needed to evaluate the store from a couple of hours to just 15 minutes.

Once a business has passed the application and screening process, they get access to a line of credit ranging from 7,000 to 200,000 Mexican Pesos. This credit line can be used to obtain 14 days of interest-free financing to purchase inventory from wholesalers. The entrepreneurs then take photos of the receipts, and the machine vision technology extracts the information from the receipt, giving YoFio information down to the SKU level. YoFio works with both affiliated and unaffiliated distributors, giving entrepreneurs the freedom to choose their suppliers. The credit line can also be used to quickly obtain cash for personal and business emergencies, subject to a disbursement fee and interest.

By calculating the inventory at the beginning and gathering information on the entrepreneurs' business purchases, YoFio is able to estimate how much stock they need to replenish on a weekly basis. Every six weeks, entrepreneurs undergo a re-evaluation process, after which YoFio can increase the credit line or lower the interest rate for entrepreneurs who are able to make good use of their credit and pay on time. In case the interest rates go down, YoFio helps entrepreneurs build their savings by placing the difference in a reserve account that they can only access after 12 weeks. The company also regularly checks in with the businesses it works with, to ensure that they are financially healthy and everything is going well.

YoFio was co-founded in 2019 by Alberto Bonetti, a seasoned financial services executive specializing in financial inclusion, along with Oscar Garavito, Robin Nuñez and Victor Valdes. Initially, it focused on allowing consumers to buy on credit from their neighborhood stores. The company pivoted to helping micro businesses access credit by giving them the cash flow and other resources to grow.

“Cash flow is one of the most common problems of micro and small businesses. Oftentimes, these businesses encounter the issue of not having the cash to invest in restocking; Yofio prevents this problem” says Bonetti. “Using advanced machine vision technology, YoFio is able to help entrepreneurs analyze their inventory, as well as access a line of credit that allows them to purchase stock without using valuable cash. Microbusinesses are incredibly important to the economy, especially in small communities, and they are the source of livelihood for nearly half of the population. Through YoFio, we hope to contribute to the financial health of microbusinesses and provide them ample opportunities to grow.”