Bengaluru-based SME lending firm Lendingkart has announced raising a fresh round of funds to the tune of Rs 50 crore from India’s fourth largest private sector bank YES BANK. The funds, the company said in a press release, will be utilised to further build the loan book as the company expands its reach to small and mid-sized enterprises (SMEs) operating in Tier III and below cities lacking formal credit facilities.
With the aim to contribute towards Government of India’s agenda of building financial inclusion, Lendingkart Finance works on the availability of working capital financing for SMEs across the country that do not have access to traditional credit avenues. The company has disbursed more than 11,000 loans to more than 7,500 SMEs across India.
Harshvardhan Lunia, CEO and Co-founder, Lendingkart Finance Ltd., said,
“At Lendingkart Finance, as we expand our reach to meet the growing needs of millions of small businesses in the country, we are extremely pleased to have YES BANK on-board supporting our vision.”
Founded in 2014 by ex-banker and ISB Hyderabad alumnus Harshvardhan and ex-ISRO scientist and IIM Bangalore alumnus Mukul Sachan, Lendingkart Finance uses in-house technology tools based on big data analytics and machine learning algorithm to evaluate its client’s business. Over 4,000 data variables are assessed to determine the financial health, comparative market performance, social reliability and compliance to statutory requirements for determining the credit-worthiness of borrowers. Once the evaluation process is completed, loan amount is disbursed to the deserving borrower within 72 hours from the time of application.
According to the 2015-16 Annual Report published by the Ministry of Micro, Small and Medium Enterprises, the number of working enterprises in 2014-15 was more than five crores, collectively generating employment for 12 crore people. The MSME segment has demonstrated a constant growth till now, with 17 percent growth in 2014-15 and 18.74 percent from April-September, 2015. Public procurement policy has mandated a minimum of 20 percent annual procurement from MSMEs from April 1, 2015.
Harshvardhan, this year, in an interaction with YourStory said that the total financial requirement is $650 billion in the MSME sector, which comprises $520 billion of debt demand and $130 billion of equity demand. The viable and addressable debt demand is estimated to be $198 billion. Micro and small enterprises together account for 97 percent of the viable debt gap, and working capital demand accounts for an estimated 61 percent of this debt demand.
Lendingkart Finance has expanded its operations pan India and is present in over 650 cities across 29 states and seven UTs, offering collateral-free loans with minimal paperwork. The company even claimed that till date, over 2,00,000 SMEs have reached out to them for their credit requirement.