Fintech startups ZipLoan, InCred partner to roll out microloans for MSMEs

MSME lending platform ZipLoan has partnered with Mumbai-based fintech startup InCred to roll out microloans between Rs 1 lakh and Rs 10 lakh with a tenure that lasts up to 36 months to the Micro, Small, and Medium Enterprises (MSMEs) that are unable to access loans from traditional banking players.

Under the partnership — which will bring access to additional liquidity at competitive rates — ZipLoan will drive and process unsecured retail business loans as per jointly created credit parameters and eligibility.

According to the startup, InCred will have 80 percent of the total loan on its books, while the remainder will be on ZipLoan’s books. The latter will also manage the entire servicing process throughout the life cycle of the loan disbursal.

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Speaking on the development, Kshitij Puri, MD and CEO, ZipLoan, said, 

“Our partnership with InCred started at the beginning of 2021, and now, we intend to scale it up further. We believe it will help us provide the necessary financing to the MSME segment, which has always been devoid of the same. The MSME segment is the backbone of the Indian economy, and for us to be a $5 trillion economy by 2025, ensuring the growth of this sector is paramount.“

The second COVID-19 wave has affected the MSME sector the most, which accounts for about 40 percent of India's GDP, and employs nearly 12 crore individuals.

While the sector is recuperating from the impact of the first wave, including a nationwide lockdown that brought production activities to a halt and disrupted supply chains, the second wave has once again brought the sector to a standstill.

According to a survey by Care Ratings — which was conducted between April 27 and May 11 with a set of 305 respondents, including small and medium businesses — as many as 84 percent of respondents said the deadly second COVID-19 wave escalated business uncertainty.

The survey also revealed that over 40 percent of the MSMEs were likely to borrow in the coming six months, whereas 41 percent said they didn't want to resort to lending.