LoanTap, an online platform delivering flexible loan products to salaried professionals, including “EMI-free” loans, is expanding its services to Chandigarh and Coimbatore this year. Currently, it is providing services in 11 cities, including Delhi, Chennai, Bengaluru, Mumbai and Indore.

The online platform, which got first round of funding after its inception in August 2017, raises funds each financial year. It eventually aims at tapping the MSME sector with an average loan size of ₹6 lakhs by expanding in the top 10 cities of India and reaching a book size of ₹750 crores in the next 3 years.

Its “EMI-free” loan has caught the imagination of borrowers. “Since the take-home salaries of young professionals vary due to a variety of reasons, our EMI-free product keeps them relatively relaxed for, say, six months during which time they pay only the interest part of the EMI. When they find the going relatively better, they can start paying 10 per cent of the principal as well,” Satyam Kumar, Co-Founder, told BusinessLine.

The loan ticket size under this product ranges from ₹2 lakh to ₹3 lakh, he said. “Interest becomes payable on the seventh day of the month. Since, this is interest-only payment, the principal amount remains unchanged, until the day you make bullet repayment towards principal reduction. Once the principal payment is realized in the loan account, your total outstanding loan balance reduces and fresh interest calculations are effected based on new outstanding. Monthly cash outflow under this product are lower by 40 per cent as compared to regular Personal Loan products” Kumar said.

It provides other flexible loans as well, ranging between ₹1 lakh and ₹ 10 lakh at a monthly interest rate of 1.5 per cent (18 per cent per annum) for terms ranging from nine to 60 months. LoanTap offers need-based loans, including for travel, buying a two-wheeler, credit card takeover, personal overdraft, rental security deposit, advance salary and consumer durables.

LoanTap is a financial technology platform using technology to deliver products to the younger generation. The borrowers can choose custom-made loan products from an array of offerings. Registered as LoanTap Credit Products Pvt. Ltd with the Reserve Bank of India, it is an NBFC offering products and features within the regulatory guidelines, thereby ensuring a transparent pricing structure, he said.

Headquartered in Mumbai and operational in Pune as well, LoanTap was incorporated in 2016 by ex-banking professional Satyam Kumar and former tech professional Vikas Kumar. They aimed to provide credit solutions in the upwardly mobile salaried segment for acquiring assets or for personal consumption and also to re-define the retail asset distribution model by eliminating the information gap between producer and consumer by breaking the clutter of direct sales agents and brokers.

He said LoanTap provides speedy disbursement of loans with an average amount of ₹4 lakhs for a period ranging from 15 days to 5 years. It also makes a pitch for flexible single and bulk payments that are convenient and cost-effective. Moreover, by being 100 per cent online, it uses minimal human interface to verify the algorithms for predicting loan amounts.