Micro, Small and Medium Enterprises (MSME) comprises a huge potential for economic growth. According to the Reserve Bank of India’s report, “India is currently one of the fastest-growing economies of the world. MSME sector is likely to continue to play a significant role in the growth of the Indian economy. In the last ten years, the MSME sector has shown impressive growth in terms of parameters like number of units, production, employment, and exports.”
For upscaling an MSME business, an entrepreneur invariably requires financial backing. Small business owners can't get adequate funds in the first place. Due to lack of awareness, small entrepreneurs resort to traditional lenders and thus, end up repaying hefty loan amounts imposed with a high-interest rate. Further, increasing restrictions by banks have curbed opportunities for small entrepreneurs seeking financial support.
However, with the passing time, another medium to reinforce MSME has come--fintech. Financial technology is one of the newest ways to receive instant, convenient and low-rate interest loans. At present, countless fintech firms are assisting small-sized firms to grow nationwide. Some of the handy fintech applications that MSME businessmen can use are:
LenDenClub is one of the growing peer-to-peer Indian lending platforms. It bridges investment firms or individual investors, who seek high returns, with trustworthy borrowers who seek short-term loans.
The fintech firm offers small-ticket loans to lenders from more than 150 cities. It asserts to provide loans in 5 minutes if the loan seeker meets qualification criteria.
Vivriti Capital renders financial solutions to a wide range of clientele from financial institutions, small enterprises, corporates to individuals. The company claims to be a one-stop solution to all debt requirements.
Shubh Loans is a Bengaluru-based company and provides lenders accessibility to underserved as well as unserved market segments. The fintech firm employs credit reports and real-time analytics that helps lenders or investors to give money to the borrowers.
So far, the fintech company has joined hands with 400 MSMEs to reinforce its distribution.
Happy Loans renders working capital loans to MSMEs. The fintech offers loans to merchants, who have employed less than 5 people in the company, and disburses short-term loans within the range of INR 1 lakh to INR 10 lakh. It imposes an interest rate of 2 per cent per month on the loans that it disburses.
While underwriting an MSME, the fintech company calibrates more than 1000 variables. It has a unique credit model wherein it assesses the merchant’s business association with his partners, his nature towards borrowing and so on.
CoinTribe runs an online platform that lends money to MSMEs and individual borrowers. It essentially connects loan seekers with banks and non-banking financial companies (NBFCs). It is the sole online marketplace that associated its credit model with banks.
For rendering loans, firstly, the fintech company calibrates credit report and then, originate loans; in essence, credit reports are shared with banks and later, the loan is granted to the borrower.