Lendingkart Has Made Borrowing Easy For MSMEs

The biggest confusion for micro, small and medium enterprises (MSMEs) is assuming the right time to look for credit, what the right amount for credit transactions is, and how fast they can raise the money to meet requirements. India is a hub of nearly 6.3 Cr MSME organizations, accounting for almost 37.5% of the GDP. But most of them fail to follow a well-structured credit financing strategy that can help them in business difficult times.

Harshvardhan Lunia, WHO BELONGS TO Ahmedabad, had seen this too often when he grew up. His father was a business owner, and the family had to live with similar challenges. However, he had built his career in finance, working with HDFC Bank, Standard Chartered Bank, and the ICICI Bank for a decade. His work enabled him to understand the fact why and how small businesses struggled to raise business loans. The situation motivated him to develop a tech-driven credit system different from legacy banks, traditional NBFCs, or other financial institutions (FIs).

Harshvardhan Lunia was keen to pursue his passion without any delay, Lunia (CEO), and Mukul Sachan (the COO left the company in 2019), and set up Lendingkart in 2014. The company was established to offer collateral-free, short-term loans to MSMEs. But it was easier to say than doing so, as the startup came to know from its extensive conversations with many small business owners.

MSMEs come with their unique set of provocations as these are more permitting to market inconsistency, and even small steps in sales can affect their yielding flow. In addition to this, there was massive paperwork required by FIs to process loan applications and the long flip-flop time for loan expenditures. As most MSMEs are regional entities located away from the Tier 1 business hubs, FIs often find it geographically pressurizing to approve such loan applications. Businesses also faced navigation challenges in making documents in English/Hindi as most of them speak their regional languages. The lack of endorsements and high-interest rates charged by the gray market operators also throw an obstruction wrench in the works.

Together, these factors have massive credit fillings. According to Research and Markets analysis, the credit demand in the MSME space is $490 Bn as per the RBI data, while the overall supply from formal sources was recorded at $192 Bn.

EXECUTIVE OPINION:

Lunia said, “Even today, the credit process in traditional FIs takes months as credit evaluations are hampered due to the absence of crucial data points. When we started in 2014, MSMEs had very few resources, and the ones that existed should have done some hand-holding for business owners due to the complicated nature of these transactions. But no one did it,”.

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Lendingkart Has Made Borrowing Easy For MSMEs

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