The Government of India has launched schemes like Stand-Up India and Pradhan Mantri MUDRA Yojana (PMMY) to make credit available to small and medium enterprises (SMEs) on time. Likewise, the nationalized and private banks also allow entrepreneurs to choose from a slew of business loan products according to their precise financial needs. But a number of studies still suggest that many SMEs still find it difficult to avail credit without any hassle or delay due to constraints like low capital base.
However, a number of non-banking financial companies (NBFCs) have been transforming the landscape of SME financing in India by emerging financial technologies (fintech). These lending institutions take advantage of fintech to launch an array of new age business loan products that enable entrepreneurs to avail credit quickly based on real-time data like monthly debit and credit card sales and value of unpaid invoices.
The smarter entrepreneurs nowadays prefer fintech companies to conventional lending institutions to avoid complex credit requirements and lengthy disbursement process. Many fintech companies even allow entrepreneurs to apply for and avail credit over the internet. Hence, it becomes easier for SMEs to avail credit by overcoming a number of constraints. The entrepreneurs even have option to choose from a wide range of technology-driven business loan products provided by several trusted fintech companies in India.
List of NBFCs Transforming SME Lending Landscape by Leveraging Fintech
The Bangaluru-based fintech company was founded by Sashank Rishyasringa and Gaurav Hinduja with the aim to provide flexible and transparent working capital loans to SMEs. At present, many entrepreneurs prefer Capital Float to conventional lending institutions to avail collateral-free credit in a simpler and faster way over the internet. Capital Float helps business owners to fund working capital needs through both unsecured business loans and merchant cash advance. It even leverages the latest financial technologies to disburse credit to the SMEs within three days. But it requires borrows to meet specific operational history, annual turnover, and CIBIL score.
The leading peer-to-peer (P2P) lending platform makes it easier for entrepreneurs to avail credit by interacting with the lenders directly. The virtual market place created by Faircent enables lenders and borrowers to interact and transact directly without any intermediaries. After becoming a registered Faircent borrower, an entrepreneur can avail collateral-free business loans up to Rs 10 lakhs. The tenure of the business loan ranges from 6 months to 36 months. Likewise, the interest rate ranges from 12% to 28% per annum. However, Faircent determines the amount, tenure, and interest rate based on the financial documents submitted by the borrower. Recently, the Reserve Bank of India issued the NBFC-P2P certification to Faircent.com.
Within a short span of time, the RBI-registered NBFC has disbursed over 20000 business loans to small business owners across India. Lendingkart helps entrepreneurs to focus on improving business processes and boost sales by availing small business loans online. The borrower can further use Lendingkart.com to check if he is eligible for the business loan, apply for the business loan, get his loan sanctioned, and receive funds. Lendingkart even helps developers to improve cash flow position and fund immediate working capital needs by disbursing the business loans within 3 days. The small business owners can even avail business loans up to Rs 1 crore by meeting the eligibility criteria set by Lendingkart.com.
NeoGrowth has provided business loans to over 7000 entrepreneurs in last five years. It even leverages the latest fintech to make credit available to two distinct segments of borrowers — online sellers and retailers with EDC/POS machines. The entrepreneurs selling goods online can avail credit through NeoGrowth online loans based on the current and future cash flows. Unlike conventional business loans, the NeoGrowth online loan does not require borrowers to submit elaborate documentation and financial statements. NeoGrowth even leverages financial technologies to disburse the business loans in 3 days. At the same time, NeoGrowth provides credit to retailers with POS/EDC terminals based on real-time data like monthly debit and credit card sales. NeoGrowth even distinguishes these loan products by minimizing documentation, accelerating disbursement, and providing doorstep service.
The RBI-registered NBFC makes it easier for entrepreneurs to avail credit by combining conventional and technology-driven loan products. Pinnacle Capital Solutions Private Limited (PinCap) allows SME owners to choose from three distinct loan products — term loans, bill or invoice discounting, and POS based loans. The term loans enable borrowers to avail credit up to Rs 50 lakhs with tenure ranging from 12 months to 36 months. PinCap even leverages latest fintech to disburse term loans in three days. At the same time, the bill or invoice discounting services provided by PinCap help business owners to avail funds by converting their unpaid invoices or goods received notes into cash. PinCap even helps retails to avail credit based on their monthly debit and credit card sales by providing POS business loans. The entrepreneurs even have option to repay the POS-based loans by choosing from two daily repayment options. However, the eligibility criteria for each of the loan products provided by PinCap differ.
The online lending platform was launched with the intention to make adequate credit available to SMEs in a fast and flexible way. FlexiLoans enables entrepreneurs to avail credit by choosing from an array of business loan products — vendor financing, line of credit, and merchant cash advance. The vendor financing option helps small business owners to fund working capital needs by converting current assets like invoices and bills of exchange into cash. Likewise, merchant cash advance enables entrepreneurs to avail up to 200% VC finance based on the sales from swipe terminals. At the same time, an entrepreneur can avail the line of credit provided by FlexiLoans to avail revolving credit. However, the borrower can apply for the loan, upload documentation, and get the loan approved directly through FlexiLoans.com.
The web-based financial service provider offer a wide range of personal and business loan products. The SME business loans provided by InCred.com enable entrepreneurs to avail credit ranging from Rs 1 lakh to Rs 10 crore. InCred Finance even allows entrepreneurs to choose from three distinct business loan products — business loan, working capital loan, and channel finance. The borrowers can fund working capital needs by availing working capital loans with tenure up to 12 months and facilitate business growth by availing business loans with tenure up to 3 years. However, the working capital loan and business loan differ from each other in terms of loan amount, repayment tenure, interest rate, and eligibility criteria.
The new age lending institutions leverages fintech to make credit available to SMEs by simplifying complex financial processes. Rubique even offer a wide range of financial products and services through its website including personal loan, business loan, credit card, home loan and insurance. It even enables small business owners to avail customized business loans by selecting from many leading banks and NBFCs. The borrower can even check out the rate of interest, tenure and processing fees for each lending institutions. At the same time, Rubique enables entrepreneurs to compare and apply for the business loans in a paperless way. In addition to helping borrowers to compare various business loan products, Rubique even helps them to submit the required documentation.
In addition to customizing business loans, the new age lending institution even aims to make small business loan experience enjoyable. Loan Frame enables entrepreneurs to apply for custom-made business loans through its website by following four simple steps — check loan eligibility, apply for the loan, upload the required documents, and choose the loan option and lending institution. It even captures and leverages online data to check loan eligibility in 60 seconds. At the same time, the virtual market place created by Loan Frame brings SMEs and lenders together from various parts of India. But Loan Frame, unlike other lending institutions, enables borrowers to apply for the appropriate loan product through a simple and straightforward process.
Usha Financial Services Pvt. Ltd. leverages financial technologies to provide an array of new age business loan products to SMEs — entrepreneur loan and SME loan. The entrepreneur loan aims to help entrepreneurs to convert their freshly drafted business plan into a successful business enterprise by accessing credit easily and quickly. On the other hand, the SME loan aims to facilitate business growth by making credit available to entrepreneurs to fund working capital needs and maintain positive cash flow. Cash Suvidha allows borrowers to apply for each of these business loan products through its website. It even leverages the emerging financial technologies to customize the business loan products and accelerate loan disbursement.
On the whole, many NBFCs in India have been experimenting with emerging fintech to make credit accessible and available to SMEs on time. They have been leveraging fintech to promote financial inclusion and provide flexible business loan products. In addition to accelerating business loan disbursement, they even leverage emerging fintech to launch innovative business loan products with multiple repayment options. Many analysts even believe that the new fintech companies have the potential to completely transform the SME lending landscape in the long run.