A 21-year-old entrepreneur is bridging the credit gap plaguing India’s SME sector

Despite the vital contribution by small and medium enterprises (SMEs) to the Indian economy, many of these businesses struggle to secure timely and cost-effective credit due to the limitations of traditional banking mechanisms.

Gurugram-based B2B credit lender Soptle aims to address this significant credit accessibility challenge by offering financing solutions to small businesses. 

Founded in 2021 by Pravas Chandragiri, then a 19-year-old entrepreneur from Balasore, Soptle was conceptualised to elevate the financial well-being of SMBs, enhance operational efficiency, and optimise cash flow.

The startup leverages advanced technology to provide financing options that empower retailers and small businesses. In just two years, Soptle has achieved an annualised Gross Loan Value (GLV) of $30 million, highlighting the effectiveness of its approach.

Soptle's range of financial solutions

Soptle's platform offers a range of financial solutions tailored to the specific needs and repayment capabilities of enterprises/retailers:

Term loans: These loans are ideal for small businesses that need capital for long-term investments, such as purchasing equipment or expanding operations. 

“It’s a little long-term borrowing which is to be paid back in equal instalments over a period of time,” explains Chandragiri.

In this case, the distributor or wholesaler can opt for a loan from Soptle without any invoice or collateral.

Invoice financing: With invoice financing, a retailer uses an invoice as collateral to obtain a loan.

Chandragiri explains, “When any retailer is seeking to purchase any product from the distributor, then the distributor will raise an invoice to the retailer. However, if the retailer is short of funds, then Soptle comes into the picture.” 

The retailers upload the invoice to Soptle’s platform, which does all the due diligence. Also, the distributor has to approve the loan amount. Post that, Soptle releases the funds to the distributor on behalf of the retailer in real-time.

Lines of credit: These loans provide small businesses and entrepreneurs with a pre-approved credit line, which they can utilize when required. Furthermore, one only pays interest on the portion one uses from the credit line, regardless of the sanctioned limit. These services empower SMBs to access credit in smaller, more manageable sums that align with their specific financial requisites.

“This is issued by Soptle to the borrower and the amount can be used as per their funds' requirements and the borrower pays only for the amount withdrawn,” he explains.

Further Pravas adds that for any loan amount sanctioned, Soptle takes the distributor as guarantor in case of a retailer, (similarly wholesaler in case of distributor and manufacturer in case of wholesaler).

“Our company is entirely data-driven, with an AI-based credit engine considering credit scores, bank account transactions, distributor and brand history, and other data to assess risk and offer collateral-free loans,” Chandragiri states.

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Market opportunities and way ahead

Soptle has a user base consisting of 17 enterprises, with over 350 distributors, and partnerships with five modern trade merchants.

“Our monthly disbursement amounts to Rs 32 crore, and our annual disbursement totals Rs 307 crore. Total disbursement is expected to be 400 crore within the next six months,” says Chandragiri.

The startup is affiliated with both banks and NBFCs to facilitate loan disbursement.

Speaking about its revenue model, Chandragiri states, “Our revenue is the difference between the interest rate charged and Processing fees. Example:- We have taken x value from the bank at the rate of a%  and given financial service to the retailer at a+b% then  b% will be our revenue.”

Soptle has secured $1.5 million in funding so far across two investment rounds from notable investors, including Kube VC, We Founder's Circle (WFC), Iceland Venture Studio (IVS), Nyra Ventures, as well as founders and CXOs from organisations like Dunzo, Jar, Gati, Google, and All-Cargo Group. 

Apart from this, Chandragiri also invested the profit from his previous company (Profitails.com) worth Rs 25 lakh to start Soptle.

The demand for credit from the MSME sector is surging year after year. The latest report from Avendus Capital estimates that the credit gap in the sector is close to $530 billion (Rs 42 lakh crore). The report shares that out of more than 64 million MSMEs, only 14% have access to credit.

In the SME credit lending space, the startup competes with players like Epaylater, Mintifi, Loantap, and Lendingkart.