The Man Enabling Indian SMEs to Get Loans Thinks New-age Lenders Will Change the Game for India

Gaurav Hinduja spoke to Entrepreneur India on the hottest topic that has created great interest in a cash-crunched economy in India – lending to SMEs and ways to strengthen them.

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The man with a deep operating experience in India with detailed knowledge of complex supply chains, Gaurav Hinduja, the co-founder & MD of Capital Float, is popular among the Small and Medium Enterprises (SMEs) of India for lending capital.

His venture Capital Float, formerly known as Zen Lefin Pvt Ltd, was founded by Hinduja and co-founder of Capital Floats Sashank Rishyasringa to enable SMEs to break limits. The company boasts of providing fast, flexible, and transparent working capital finance to SMEs looking to grow their customer orders, purchase inventory, or optimize cash cycles.

Prior to Capital Float, Hinduja ran operations for Gokaldas Exports, India’s largest apparel manufacturer employing 40,000 people with $250 million in revenues.

His digital lending startup raised $22 million from Amazon Inc in 2018 and counts Ribbit Capital, SAIF Partners, Sequoia India and Creation Investments as its existing investors. It competes with digital lending startups such as Ziploan, Lendingkart, Aye Finance and Happy Loans.

He spoke to Entrepreneur India on the hottest topic that has created great interest in a cash-crunched economy in India – lending to SMEs and ways to strengthen them.

Hinduja is an avid believer in the India growth story and thinks the SME lending space in the country has seen an interesting shift.

“In the last three to four years since the revolution of digital lending, we have a lot of young companies that are attacking different niche within SMEs lending space. We were the one who started with sellers online and going after e-commerce and ecosystem-based SMEs,” says Hinduja.

He observes that a lot of traditional organizations that have developed unique underwriting models to go after SMEs in tier three-tier four towns and have developed interesting underwriting models.

“The second thing that happened is the advent of the data  and another ecosystem to provide loans to the SMEs, saved data allows lending to the SMEs, information arbitration has reduced GSTN (Goods and Services Tax Network) has prompted online transactions, data sourcing will help to increase in penetrating of loans to SMEs,” says the Stanford University graduate.

SMEs To Benefit From Economic Shift

Hinduja thinks the demand by SMEs is huge because today about $300 billion of SMEs’ loan goes through the informal sector and what India has started to see is new-age fintech lenders are able to match the speed and execution of an offline money lender.

“What we continue to see is SMEs moving away from informal sector and coming to us (Capital Float) that will increase over time,” believes Hinduja.

Trust While Lending

Hinduja thinks lending is a tricky business but Capital Float is well covered.

“The USP of the business is we look at a few things like traditional data sources, bank statements, bureau scores, partner and transaction level data and psychometric and demographic scores and a combination of these sources along with digital footprints created through social media to get a holistic score on whether the person should get a loan or not,” explains Hinduja.

According to him, Capital Float ensures the company looks into the data of the business - its background and the working style - also the transactions of the company to keep a check on the working and the resources borrowed and lent by it to get a clear picture on whether to invest in the company or not.

The co-founder of Capital Float, Sashank Rishyasringa, was earlier interviewed by Entrepreneur India magazine. 

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