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An SME Lending Specialist

An SME Lending Specialist

Sashank Rishyasringa, Co-founder, Capital Float

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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

I and my co-founder Gaurav Hinduja being in the Silicon Valley were inspired by disruptive fintech models like Lending Club, US-based peer-to-peer lending company. So when we came to India and saw huge opportunity in terms of market gap and demand for digital lending to SMEs across sectors, we started
Capital Float in 2013. Today formal lending to SMEs is roughly around $150 billion but the unmet need is from $200 billion to $0.5 trillion by various estimates, and this is massive. The gap exists because formal finance institutions haven’t really focused on SMEs, which is a highly heterogeneous sector. 

Leveraging E-commerce Growth Since collateral and delayed payments on their invoices are a huge issue for SMEs growth, they need capital quickly and conveniently. At Capital Float, SMEs can get approval for funding within 24-48 hours and funding within 24 hours. Our seed round of $4 million in mid 2014 was one of the largest seed rounds in India that time which helped us create mainstream acceptance of this model. We are the first mover in the space so we have reached to lot more SMEs than other players. So far, we would have funded close to 1,000 SMEs and disbursed Rs 300-400 crore across 40 cities in India. Our customer base has grown almost 20 times since early last year. On an average, we get  a loan request every 10 minutes. Importantly, with e-commerce growth, lots of marketplaces are helping SMEs to grow online, so the macro environment with lots of government initiatives have also improved which is helping us grow as well.

Currently, almost 50 percent of applications come from Tier 3 cities in a month. Our customers are micro and small enterprises with annual turnover worth Rs 25 lakh–20 crore. So far, we have raised about $17 million, which has gone into building team, technology platform and lending. We are close to 200 people currently. 

The most fulfilling thing about this business is that there is an opportunity to really make an impact. We plan to be reaching to 100 cities by end of next fiscal year. Our interest rates are also very competitive in terms of unsecured lending, which ranges from 16-20 percent depending on the business traction. If the business is doing well, it may get loan at 15-16 percent vis a vis around 18-19 percent if it is a new business.

Edition: December 2016

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