Empowering Micro-Entrepreneurs to Grow Together


8. Decent Work and Economic Growth 10. Reduced Inequalities 11. Sustainable Cities and Communities 17. Partnerships for the Goals


Equitree provides no-interest loans to micro-entrepreneurs as a selection mechanism to identify and screen those enterprises most likely to succeed with additional mentorship and financial capital support. Profit-sharing is encouraged (but not required), and guaranteed re-investment follows from meeting no-interest loan terms. "Superstar" entrepreneurs receive free personalized mentorship, and more significant capital investments are possible through formalization into a traditional business partnership. Unlike many micro-financing arrangements that use a combination of non-Sharia-compliant debt and equity, Equitree has developed a lending process that facilitates a growing relationship between investor and investee throughout the capital-raising process.


Syahnovar Datau

Syahnovar Datau


IPMI International Business School

IPMI International Business School


Amelia Naim Indrajaya

Amelia Naim Indrajaya


Launched by Allianz, the world's largest insurance company, Equitree provides a novel method for financing Indonesian micro-entrepreneurs. Rather than issuing high-risk loans, Equitree issues small no-interest microloans. They use individual payback as a barometer to potentially engage highly-capable micro-entrepreneurs into a broader discussion about an equity capital investment with shared ownership.

Equitree emerged from the concern that many Indonesian micro-entrepreneurs cannot obtain a traditional loan from banking institutions. Their businesses are small, and they lack suitable collateral. In general, many of them flourish without ever utilizing traditional banks. Even when successfully obtaining a conventional loan from the bank, the immediate monthly interest and principal payments place an exceedingly heavy financial burden on monthly cash flow. Equally problematic are issues of Islamic laws that prohibit usury or interest-bearing loan financing.

Equitree is different. Equitree begins by providing no-interest loans to micro-entrepreneurs (often referrals from existing "superstar" investments). Profit-sharing is encouraged, but those who fulfill the terms of their no-interest loan agreement are guaranteed a similar re-investment. Those who complete two or more cycles of no-interest loan financing with accompanying profit-sharing of 10%+ are denoted as "superstar" investments and offered further development through personalized mentorship and additional performance-based funding. Highly successful micro-entrepreneurs are invited to participate in an equity-based capitalization in which ownership is shared between the individual entrepreneur (60%), Equitree (30%), and the assisting mentor (10%). This step-wise financing approach helps micro-entrepreneurs achieve independence and build sustainable businesses.

The Equitree investment model is also Sharia-compliant, meaning it conforms to Islamic religious law prohibiting the application of interest to debt investment. Indonesia is home to the world's largest Muslim population, and the model of no-interest loans with optional profit-sharing provides a welcome base from which to build trust between entrepreneurs and investors. This foundation is later transformed into a potential equity investment -- a riskier prospect for investors, but mitigated by an existing positive relationship with the micro-entrepreneur.

The amount of an individual no-interest loan is small -- a maximum of 2 million Indonesian Rupiah (approximately 150 USD). This investment is used as working capital or to facilitate improvements to their existing business. While successful repayment within six months guarantees a 2-month option for re-investment, sharing profits with Equitree (returning more than the borrowed amount) provides the potential for a 30% - 90% increase in subsequent no-interest financing. Successful investments that include profit-sharing are considered "stars," and following two successive "star" repayments, the micro-entrepreneur is regarded as a "superstar" eligible for personalized mentorship.

As the business develops through mentorship and continued performance-based financing, micro-entrepreneurs learn valuable skills about sustainably managing their business. Select businesses receive an offer to formalize traditional equity financing, transforming itself into a de facto partnership between the micro-entrepreneur, Equitree, and the assigned mentor. A traditional bank assumes responsibility from Equitree for ongoing diligence, allowing the micro-entrepreneur an introduction to a conventional lender for future investment. Eventually, Equitree seeks to sell its 30% equity share for a profit, reinvesting the proceeds into capital for subsequent no-interest loans to other businesses. Successful micro-entrepreneurs have the opportunity to become future mentors and refer qualified businesses to apply for an Equitree loan.

Empowering Micro-Entrepreneurs to Grow Together


Perhaps the famous saying, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime,” is most appropriate to describe Equitree's approach to helping Indonesian micro-entrepreneurs flourish and develop sustainable businesses without compromising their religious principles.

Born from a corporate social responsibility (CSR) program initiated by Allianz Indonesia in 2016, the genesis of Equitree was the persistent lack of access to traditional banking institutions by micro-entrepreneurs seeking small capital investments. The CSR program was initially coined Trust Network Finance (TNF), and upon conclusion of a 16-month pilot test, it rebranded and transformed into Equitree. The business model is consistent with the "Economic Empowerment" pillar of the Allianz Indonesia CSR program.

Overall impact

Equitree has a potentially transformative impact on Indonesia's population of micro-entrepreneurs. These remarkable individuals manage over 58 million businesses comprising 97% of total national enterprises. Nearly 60% of Indonesian citizens are "unbanked," meaning they lack access to conventional forms of capital investment. Adherence to Islamic religious laws prohibits traditional debt financing. Equitree is the first microfinance alternative to provide no-interest Islamic finance assets that can bridge toward equity investment through successful repayment of microloans. According to the Center for Financial Inclusion, the market for these types of investments averages 31% each year and is projected to grow stronger if current regulations are relaxed to allow increased foreign investment into the Indonesian banking system.

Business benefit

Since launching in 2016, Equitree has generated considerable interest and third-party recognition. Initially targeting the Jakarta suburb of Bogor, a successful pilot of 166 investments (approximately 100 individual micro-entrepreneurs) resulted in an 82% recovery ratio. This result exceeded the 76% target assumed for the pilot study. Investments varied between industrial, agricultural, and service sectors, with micro-enterprises ranging from food production to air conditioning service.

Beginning in 2018, Equitree expanded to other cities in central Java, including Boyolali, Semarang, Ungaran, Salatiga, Sleman, Bantul, and Yogyakarta. Maintaining its impressive growth, Equitree has invested (as of June 2019) in 88 additional micro-entrepreneurs, providing essential capital to businesses including clothing manufacture, mushroom farming, and handicrafts.

Social and environmental benefit

According to the Indonesian Ministry of Cooperatives and Small, Medium Enterprises (SME), Indonesia supported over 58 million micro-enterprises in 2018. Most are informal individual or family businesses, and the majority are considered unbankable (lacking collateral). By widely disseminating the no-interest loan approach developed by Equitree, millions of potential micro-entrepreneurs can become financially independent and build sustainable businesses without compromising religious principles. The resulting economic influence creates a positive impact for all stakeholders. By incorporating successful entrepreneurs into the next generation of Equitree investment mentors, the approach also transforms investees into an organic form of leadership for the future.


Indra Yuliawan, Allianz - Equitree

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Bogor, Boyolali, Semarang, Ungaran, Salatiga, Sleman, Bantul & Yogyakarta, West Java, Central Java, ID

Business Website: www.allianz.co.id

Year Founded: 2016

Number of Employees: 2 to 10

Initiated by Allianz Indonesia in 2016, Equitree introduces a new financing model to empower micro-entrepreneurs by offering no-interest loans and encouraging profit-sharing. Rather than providing traditional interest-bearing loans, Equitree uses no-interest investments to identify "superstar" entrepreneurs who are eager to receive mentorship and eventually engage as business partners who flourish with additional capital and service support.