4 microfinance companies helping micro and small enterprises with collateral-free loans

Microfinance is a boon for entrepreneurs as it helps them avail small business loans without the burden of collateral. This enables these entrepreneurs to start or scale their business at a micro-level. 

There are around 6.3 crore micro, small and medium enterprises (MSMEs) in India that contribute to 29 percent of the GDP.  Micro enterprises alone constitute 93 percent of that number. However, despite this, the micro sector struggles the most with financing due to its unorganised nature and absence of documentation and paperwork.   

SMBStory lists five microfinancing platforms helping micro and small enterprises get small ticket loans. 

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Aye finance

Gurugram-based Aye Finance aims to address the lack of credit access problem of micro-enterprises through tech-based processes to build credit insights.

Founded in 2014 by Sanjay Sharma and Vikram Jetley, Aye Finance offers Rs 1-3 lakh of a borrowing line in the form of working capital to micro-enterprise owners, who typically have annual sales of Rs 25-50 lakh. 

The company has multiplied its footprint to 173 branches in 18 Indian states and has disbursed loans worth Rs 3,300 crore to over 2,30,000 Indian micro-enterprises. It has doubled its revenue in FY 2019-20 to Rs 410 crore.

Zip loan

Catering to the working capital needs of small and medium businesses, Zip loan is a New Delhi-based fintech lending platform that provides micro-loans of up to Rs 5 lakh to small and medium enterprises (SMEs). 

Co-founded in 2016 by Khitij Puri, has to date disbursed ziploan more than 11,000 loans starting at a reducing 24 percent interest rate. 

Through its proprietary ZipScore (machine learning-based risk assessment), lean operations and co-lending model with leading banks and NBFCs, Zip loan provides business loans of up to Rs 10 lakh at a fraction of the cost compared to traditional lenders and in one of the quickest turnaround times in the industry.

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Moneyboxx 

Moneyboxx is a Mumbai-based NBFC founded by Deepak Aggarwal and Mayur Modi that extends loans to individuals, which falls in a significantly underserved market.

The company was formed to address the unmet credit needs of micro-enterprises by providing easy, cost-efficient, and technology-driven financing solutions. 

A BSE-listed NBFC, it provides small-ticket unsecured loans from Rs 50,000 to Rs 3,00,000 to micro and small enterprises in mostly Tier II and III cities in India and charges an interest of 27 percent.

Moneyboxx has expanded its presence to 22 branches across four states with Assets Under Management (AUM) of close to Rs 64 crore as of March 31, 2021. It has an income of Rs 4.17 crore as of FY20.

Save Solutions

Save Solutions is a Bihar-based company focusing on giving access to financial products via kiosk banking and customer service points (CSPs) to rural and semi-urban unbanked citizens.

Founded by Ajeet Kumar Singh, Pankaj Kumar, and Ajay Kumar Sinha, Save Solutions has roots across India in 488 districts with over 12,000 kiosks in rural areas.

In the microfinance division, the company has given loans to around one lakh clients without taking any collateral and security from the client. The loans can be taken for setting up micro-enterprises such as a dairy or shop etc., at an interest of 21 percent.