LendingKart – Internet Financing for Micro / Small Enterprise

Micro and Small Businesses in India need capital to support growth, expansion or operations. They have traditionally been funded by family and friends, but are now more open to and prefer borrowing from third parties. There are several reasons why banks do not adequately address this demand. The need for funding for SMEs might be short-term or immediate or the requirement of a credit history or collateral might hinder their prospects. LendingKart jumped to address this demand by giving short tenor unsecured working capital loans on a fully online platform without the requirement of a credit history. The company aims to be a one-stop shop for all SME needs including lending, insurance, payments etc.

LendingKart’s platform uses all available information on the customer including submitted bank statements, transaction data, credit bureau data, data from ecommerce or telecom partners, social media data etc. to make a credit assessment of the customer. Flexible options of loan amount, tenor and interest rates are provided instantly, without human intervention based on the assessment.

Customer Profile – Customer are acquired through digital marketing, finance aggregators, direct sales agents, strategic partnerships with e-commerce players, enterprise supply chain (FMCG distributors, telecom retailers etc.). A third of the customers are sourced through social networking platforms. ~80% of the customers are from non-metros, ~75% are graduates, ~90% are less than 45 years of age and employ less than 10 people. 75% of the
customers are traditional offline businesses with apparel retail, electronic accessories, and industrial suppliers being the top business segments.

Collections are done using outsourced on-ground collection teams although probability of default is predicted using analytics. Average delays are ~4.2% and NPAs are ~1.7%. The company believes it has first mover advantage among e-commerce sellers and competition is low in the