While obtaining funding is a problem for most small businesses, those in the developing world often have additional challenges to overcome. Indian FinTech company Lendingkart is working to break down barriers to provide these businesses with the funds they need to survive and thrive.
“Through our multiple interactions with SMEs, we realised that their biggest pain point is availability of capital,” Harshvardhan Lunia, co-founder and managing director of Lendingkart, explained in a 2017 interview with India’s Free Press Journal.
“Our long-term vision is to replace distributor credit or funding by friends and family by offering relatively economical source of funds at the click of a button.”
The startup has a similar business model to US-based Lending Club, in that applicants can solicit a loan online without needing to go to a bank or another financial institution.
“Technology has been the back bone of all we do at Lendingkart Group as we constantly innovate towards a more seamless and automated loan disbursal process,” Harshvardhan told TechBullion.
Lendingkart’s algorithms use over 4,000 “traditional and alternative” data points to score credit applications.
“Lendingkart has enough data available to determine a customer’s intent to pay back a loan, the quality of his product or service, the financial health of his business, and ability to survive with competition,” Harshvardhan stated in a a 2015 interview with TechCrunch.
“We don’t ask the customer to fill out large forms. We scrape this data from public and private sources and APIs (application programming interfaces).”
Since its founding five years ago, the Bangalore-based startup has offered 60,000 loans to over 55,000 small and medium-sized enterprises in 1,300 cities in India. According to Harshvardhan, banks and formal financial institutions are only accessible in a few hundred cities in India, encouraging companies like Lendingkart to close that gap.
“While 65 percent of India’s business comes through these 300 cities, there is also close to 4,300 to 4,700 other smaller cities and trade hubs across the country which are contributing to close to 35 percent of India’s GDP but do not have access to formal credit options,” he explained.
Lendingkart offers working capital loans, business loans, MSME (micro, small and medium enterprises) loans and business loans for women.
The application process reportedly takes 15 minutes; most loans are approved in a few hours and disbursed within three working days.
The FinTech starup recently raised $30 million (₹212 crore) in Series D funding, resulting in a total of $143 million to date. Fullerton Financial Holdings, Bertelsmann India Investments and India Quotient funded the round.
“Micro and small businesses represent a vibrant yet underserved segment of the Indian economy,” Harshvardhan said in a statement. “The support of all of our customers, investors and employees is empowering us to build the leading financial services platform for this segment.”