Fintech, digital lenders launch schemes for MSME credit

As banks are being prodded by the government to extend liquidity support to micro, small and medium enterprises (MSMEs), a number of digital lenders and non-bank finance companies are jumping aboard to offer fast credit solutions to these firms.

In recent weeks, many such players have announced plans to provide funding to the sector, which needs ready cash solutions to restart operations after the Covid-induced lockdown.

For instance, U GRO Capital, a technology-first, small-business lending platform, plans to roll out an end-to-end digital lending platform for the sector and plans to reach out to five lakh MSME clients.

To be launched on July 1, the Sanjeevani platform will offer unsecured loans between ₹10 lakh and ₹25 lakh for a duration of two to 36 months, and secured loans between ₹50 lakh and ₹2 crore for seven to 10 years. It also plans to offer an in-built, up-front, moratorium up to three months to aid businesses whose working capital cycles have been disrupted either by supply-chain breakages, labour issues or adverse cash flows during the national lockdown.

Similarly, SOLV, a B2B digital platform for MSMEs, has launched a credit card along with Standard Chartered Bank to meet ongoing business expenses, including supplier payments, fuel, logistics, purchase of raw material, utility payments and other working capital outlays.

Instamojo, a full-stack MSME-solutions provider has introduced ‘InstaCash’, which enables merchants to avail loans for an amount up to ₹1 lakh, for a 7-14 day period. The company has reported growth of 25-30 per cent in its merchant base since the start of the lockdown.

A recent report by ICICI Securities had noted that the rollout of a ₹3-trillion crore Emergency Credit Line Guarantee Scheme (ECLGS) has kick-started the flow of funds into the MSME/Mudra segment.

“Banks have disbursed ₹329 billion (of the cumulative sanctions worth ₹754 billion). As anticipated, PSU banks are in the forefront (two-third of disbursements) with SBI taking the lead (one third),” it had noted.