5 top FinTech lending companies for MSMEs in India
By Edil Corneille
Financial technology (FinTech) has disrupted the traditional lending process and made loans more accessible to the underserved and underbanked segments. Banks are usually wary of lending to Micro, Small and Medium Enterprises (MSMEs) and are more cautious amid COVID-19 times. Small businesses generally face challenges to show collateral and are hence unable to avail credit from these financial institutions. The rise of FinTech lenders has proved to be a blessing for MSMEs as the loan process takes place in a digital manner. This means that financing is seamless as the paperwork involved is minimal or even zero. Mentioned below are the top Indian digital lenders that are providing seamless financing to MSMEs. These FinTech platforms offer loans to small businesses in the country.
Capital Float is a digital financial services company in India. The company’s core product is flexible and timely credit delivered over a seamless mobile experience. Capital Float leverages technology to deliver financial products to businesses and individuals across the country. Through its proprietary digital loan underwriting and origination expertise, it has been able to deliver financing solutions to vast sections of the economy traditionally underserved by large financial institutions.
Founded in 2013, Capital Float is the trade name for CapFloat Financial Services Private Limited (formerly known as Zen Lefin Private Limited), a Non-Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). The company has raised funding from marquee investors such as Elevation Capital (formerly SAIF Partners), Sequoia India, LGT Lightstone Aspada, Creation Investments Capital Management LLC, Ribbit Capital and Amazon.
In November, Capital Float reported having financed customer purchases worth INR 4 billion since March 2020 and witnessed a 350 per cent growth in its ‘Buy Now Pay Later’ (BNPL) customer base in a span of 7 months when compared to FY20.
The digital lending NBFC is empowering customers with fast and simple loans for all of their personal and business needs. Clix Capital offers a full spectrum of financing solutions across 5 business segments which are corporate finance, equipment finance & leasing, SME finance, consumer finance, and housing finance.
The company has been co-founded by Pramod Bhasin, founder of Genpact and former CEO of GE Capital India and Asia, and Anil Chawla, former CEO of GE Capital India and Asia’s Commercial Finance Business. Along with AION Capital Partners Ltd., Pramod and Anil jointly acquired the commercial lending and leasing business of GE Capital India in September 2016 and rechristened it as Clix Capital.
Clix Capital works towards changing the way the lending business works. This is done through the usage of technology to make loans easier and relevant to consumers. The company evaluates loan applications with its digital processes and smart ways.
Ahmedabad-based FinTech startup Lendingkart is in the working capital space. The company has developed technology tools based on big data analysis which facilitates lenders to evaluate the credit worthiness of borrowers and provides other related services.
Lendingkart has special MSME loans and SME loans for businesses looking for quick finance in the country. These loans are approved through an online process which helps in speeding up the financial vehicle delivery. Lendingkart also allows several customisations to its financial products that said to make them ideal for competitive business environments in the present times.
Lendingkart is a non-deposit taking NBFC providing SME lending in India. The company aims to transform small business lending by making it convenient for SMEs to access credit easily. Lendingkart uses technology and analytics tools, analysing thousands of data points from various data sources to assess the creditworthiness of small businesses rapidly and accurately.
SMEcorner is a new age FinTech lender that helps SMEs in India meet their working capital needs with collateral-free business loans in 24 hours. SMEcorner is disrupting structural challenges of MSME lending in India by leveraging proprietary tech and data science that solves the complex SME underwriting problem. The company uses a proprietary online platform that combines machine learning, data science, and artificial intelligence to provide a seamless and fast customer experience.
SMEcorner has a balance sheet support of 10 billion from partners such as IDFC First Bank, Ambit, Fullerton India, Northern ARC, DMI Finance. The company also has support from lenders such as HDFC Bank, SIDBI, AU Small Finance, U GRO Capital, and InCred, among others. SMEcorner is backed by Quona Capital, Paragon Partners, ACCION, Triple Jump. The company’s portfolio has witnessed a 7 per cent month-on-month growth, since September 2018.
SMEcorner has a proven principal and platform lending business model at scale along with a focus on risk management and collections. The company has products such as unsecured business loans and loan against property with special products like MSME loans and women entrepreneur loans to meet the needs of working capital and encourage women entrepreneurs in India.
U GRO Capital
U GRO Capital is a business lending FinTech platform. The company is focused on addressing the capital needs of small businesses operating in the select 8 sectors and provides customised loan solutions. The 8 sectors are healthcare, education, chemicals, food processing/FMCG, hospitality, electrical equipment and components, auto components, and light engineering.
The company has raised ~INR 9.2 billion of capital from a diversified set of private equity funds such as institutional investors and well-known family offices. U GRO Capital additionally lends to microenterprises which behave as a monolith and act a pseudo 9th sector. The company strives to build a strong SME financing platform based on sectoral understanding supplemented by a fully integrated technology and analytics platform.
U GRO Capital believes that the problem of small businesses can be solved by building deep expertise around core sectors of SMEs in India coupled with a data-centric, technology-enabled approach. The company uses a unique combination of intelligence and technology using statistical predictive modelling to understand the potential for growth of a business.
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