Though the demand for loans from the SME is robust, most SMEs have a problem in accessing loans at relatively lower interest rates.
However, use of technology can bridge the gap between the credit demand and the lenders and benefit the SMEs, according to Shailesh Jacob, chief executive officer and founder of Loan Frame, a marketplace that brings lenders and borrowers together through mobile site and an application.
While the government is doing its bit to support SMEs, the demand in the segment is vast and needs participation of multiple lenders. The high cost of customer acquisition is a hindrance for financial institutions. Through our technology platform, we will match the credit need of SMEs with lenders,
SME lending decreased by five per cent in 2016 and in the previous year it saw a modest seven per cent growth in 2015. However it was a healthy 17 per cent in 2014, he said.
Use of technology to originate customers makes it faster and transparent. We do KYC validation. We use non-traditional data too and go beyond the annual statement of turnover,
said Jacob adding that it continues to monitor the loan even after disbursal.
Loan Frame is seeing a loan demand to the tune of Rs 1,000 crore every month. Telangana represents about eight per cent of that. We are positive on Telangana as it is strong in IT Servcies, pharma, bulk drugs and other segments,
Among others, it has enabled funding to a company in the airline space in Hyderabad, said Jacob adding that the platform has have received over 1,000 applications from Telangana. It will launch campaigns across sectors and also has plans to launch a satellite office in the State in view of the high demand.
Currently, it is working with about 12-14 lenders and is working to add 12 more from the private sector shortly. The rate of interest ranges from 9 to 12 per cent for secured loans while it goes from 14 to 24 per cent on unsecured loans. The ticket size is Rs 3 lakh upwards to Rs 50 crore. It now has about 50 loan products and will introduce more.
For fraud prevention, it is connected to government and private data and uses machine learning and artificial intelligence to predict trends and suggest remedial actions to the lenders, he said
SME try to get loans primarily from state finance companies, societies and money lenders.
Commercial banks come next. SMEs are on the lookout for channels that ease the loan process as well as competitive prices,” said K Koteswara Rao, co-convener, All India Forum For Small and Medium Enterprises, about the difficulty SMEs face in raising loans.
The Article was authored by on April 12, 2017