High Yield Social Impact in Central Java, Indonesia

Invest in traditional market sellers in Indonesia's cultural heartland

BMT Bina Ummah 2 Variable Profit Rate Sukuk  Due On 02 Mar, 2020


This investment pays a periodic profit-sharing payment based on a portfolio of microfinance. Proceeds from investors fund micro-entrepreneurs to start or grow businesses through financing purchases of raw materials, commodities, and other equipment.

Individual businesses funded by the portfolio are selected by the Issuer, which is a non-profit microfinance cooperative located in Yogyakarta, Indonesia. This investment helps them expand the reach of  their existing microfinance activity with their service area.

Strengths & Why Invest

This project is ideal for investors seeking a high-reward investment making a directly, positive social impact.

The project is managed by a highly experienced institution with over 20 years of operational experience in this area, and a strong track record of underwriting for microfinance.

Profits generated by this investment come from a portfolio of underlying businsess. The default of any one or more individual business will not likely have a materially adverse effect on the overall portfolio.

Legal Structure

This investment is structured as a profit-sharing agreement (mudarabah).

Individual investors based outside the USA receive a profit-sharing note directly from BMT Bina Ummah.

Institutional investors or investors based within the USA have the option to invest via an SPV (special purpose vehicle).

Important Risk Factors

Microfinance involves a high degree of risk that includes both the Issuer as the manager of the microfinance portfolio along with the underlying composition of the portfolio. Macro economnic conditions may also influence the default rate of the underlying portfolio.

This investment is structured as a profit sharing profit-sharing agreement (mudarabah) and therefore neither profit nor the principal investment amount is guaranteed. Investors may lose funds up to and including the full amount invested.

There will be no public markets for this investment and therefore this investment must be held to the maturity date stated to realize profit on the investment.

Other risk factors include: international tax consequences; limited portfolio diversification, legal, tax, & regulatory risks. Investors should familiarize themselves with the "Certain Risk Factors" exhibit to the Mudarabah Investment Agreement which can be found within the "Legal Docs" tab.


What is microfinance?

Banks are a very important tool in helping people leave and stay out of poverty. But in Indonesia, many members of society are not well served by banks due to three main reasons: lack of access, cultural barriers, and fees.

Problem: Access, Culture, & Fees

For many people, banks physically do not exist near where they live or work, and may be closed during their off hours. For others, they may feel uncomfortable entering a fancy bank branch as they feel banks are only suitable for the wealthy. And for the majority, the fees charged by a normal bank account are simply too high to justify it: a typical Indonesian worker may be able to save about $10 USD per month, but bank fees are around $1 USD per month - a cost of 10%. 

It's because of these reason that millions of people lack access to bank accounts.

Solution: Banking for the Working Class

To meet the banking needs of the working class, a model known as microfinance has emerged. In Indonesia the most popular form of Islamic microfinance is known as the BMT model.

The BMT model a sustainable commercial model with non-profit charitable activity aimed at making a positive social impact.

To combat the issue of access, BMTs typically send their agents to the businesses of their members on foot or via motorbike, so members don't need to visit a physical branch office far from their home or work. BMTs aim to meet their members at convenient hours, even as early as 4AM when many market traders are most active. This model - where the bankers come to you - is much cheaper than building big fancy bank offices staffed by people in suits and ties, so it allows BMTs to grow their reach much faster and wider than a typical bank. 

In terms of culture, BMTs are run and managed by members of the local community. This means often times the bank agent is someone already well known to the member. BMT agents aim to serve their local community and help all members to feel respected, welcomed, and valued. This eliminates some of the cultural discomort that the working poor often experience when encountering traditional banking.

In terms of fees, BMTs typically offer totally free savings accounts. This helps members save money, because often times the alternative is saving money in cash at home which - when in close-reach - may be unwisely spent. Members value the ability to place their funds with BMT for safe keeping to help become more disciplined with saving.

Financing for Productive Business Activity

Unlike many banks and P2P loan schemes, BMTs exclusively finance productive business activity. A key component of BMTs underwriting criteria is personally meeting with the business owner and ensuring the funds will be use for productive purposes.

Shariah-Compliant Financing Model

BMTs are faith-based initiatives which offer financing in a way compatible with Shariah rules. Most BMT members need financing to purchase raw materials, commodities for sale, or to purchase equipment. BMTs finance these purchases using a "cost-plus" model known as murabahah, where the BMT purchases the desired item or items for the member with a specific, mutually agreed markup in cost.

Note that this murabahah financing arrangement should not be confused with commodity murabahah (also termed tawaruq) - a different type of arrangement used by some Islamic banks by using an intermediary commodity to facilitate a loan contract.

BMTs financed on the Blossom platform use ordinary cost-plus (murabaha) financing based on purchase of actual items desired by the business or profit sharing (mudarabah). 


The Issuer's mission since it's founding in 1999 has been to reduce poverty through financing profitable businesses that generate livable incomes.

Fighting the Loan Sharks

BMT Bina Ummah was founded adjacent to the Pasar Godean traditional market to combat the problem of loan sharks.

At that time, a lack of financing options for the market's sellers and traders created a perfect opportunity for abuse by predatory lenders. Termed "rentineer" in Bahasa Indonesia, these loan sharks charge excessive interest and often do not provide written records, allowing them to arbitrarily add on fees or additional interest and perpetuate a cycle of debt with the borrower. Many borrowers end up repaying two or three times more money than originally borrowed due to this predatory lending activity. 

However, for many market traders, financing is absolutely critical to their business, especially to meet seasonal fluctuations in demand.

The Weapon: Cooperative Financing

BMT Bina Ummah not only provides money, but also helps equip the business owners with training to understand the financing model. In many cases, they are able to help sellers source materials at lower prices through their strong knowledge and relationships within the wholesaler markets, since some wholesalers are also members.

BMTs ensure financing will be used for productive purposes. They clearly explaining the cost of financing and the repayment cycle. Although most contracts stipulate a monthly payment, the vast majority of business owners voluntarily pay on a daily basis to ensure they never get behind on their payments. BMT staff typically pay a personal visit to each business to avoid the need for business owners to spend precious time away from their business. Many business owners cite this as a key factor for chosing BMT.

This model of financing aimed at improving and helping the business, along with a clear, well explained contracts, and reasonable rate of financing puts huge pressure on the loan sharks.

Thanks to the diligent efforts of this BMT through the years, loan sharks and predatory lending have been completely eliminated from the Pasar Godean traditional market.

Sustained by Profit. Invested in Community.

All BMT model combines commercial finance with non-profit activity for the benefit of society. BMT Bina Ummah is no exception.


One of the most unique and innovative models pioneered by BMT Bina Ummah is providing ready-made "businesses-in-a-box" to the unemployed. In this model, they provide a working food cart business - complete with everything like raw ingredients, plates, napkins, and even some spare change in the cash drawer - and grant the business to a highly motivated and yet unemployed member of the community.

The business is provided as a diminishing joint-venture profit-sharing (muharakah) model, meaning a share of profits from operating the business are paid back to BMT Bina Ummah to replace the original capital used to create the business. Eventually, BMT Bina Ummah recoups the entire principal capital amount, and the entrepreneur owns the business 100%. 

Recipients of the business-in-a-box model (who start with zero income) typically generate income that exceeds two times the local minimum wage.


Profit Sharing

This investment is structured as a profit sharing. Investors will share profit with the issuer in the ratio indicated.

Tax Treatment

Indonesian withholding tax generally qualifies under tax treaties to avoid double taxation in investors' home tax jurisdictions. Investors should consult with their local tax lawyer.

Platform Fees

Blossom will collect a 20% carried capital interest on profits earned by investors. Blossom's fee is calculated after local withholding tax.

Est. AROI1
12 Months
Maturity / Term
70% / 30%
Profit Sharing (Investor / Issuer)
$9,000.00 (USD)
Minimum Investment
$9,000.00 (USD)
Minimum to Close
$85,000.00 (USD)
Maximum Capacity
Trading / Transfer

Get in Touch

United States

55 E 3rd Ave
San Mateo, CA 94401


Satrio Tower 16th Floor, Mega Kuningan
Jl. Kuningan Barat Raya, Jakarta 12950

Important Legal Info

Blossom is a trademark of Blossom Labs, Inc. a U.S. Delaware Corporation. For inquiries, contact [email protected]

1. Blossom Investments are not guaranteed or insured, and investors may lose some or all of the principal invested. Blossom is not a financial adviser and statements appearing on Blossom's website and communications from Blossom do not constitute financial advice.

2. Historical Returns are not intended as a promise of future results. Blossom Investments are not insured or guaranteed and investors may have negative returns. Individual portfolio results may be impacted by, among other things, the size and diversity of the portfolio, the exposure to any single Note, Beneficiary or group of Notes or Beneficiaries, as well as macroeconomic conditions.

3. Actual results may differ materially from projected and/or historical returns. Blossom Investments are not guaranteed or insured, and investors may lose some or all of the principal invested. Prior to making an investment decision, prospective investors should carefully consider all terms and risk factors stated in the offering documents and information appearing in/on Blossom’s website and apps. Investments are subject to a number of risk factors, including but not limited to issuer credit, currency, political, legal, regulatory, liquidity, settlement, concentration, portfolio performance and platform risks.

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