Rising non-performing assets (NPAs), overleveraged large companies and the general unwillingness of banks to lend money has meant small businesses are now finding it next to impossible to raise money. As loan portfolios sour, banks do not want to take the risk of lending to an SME.
Coupled with that is the fact that a large number of small businesses have no access to formal sources of finance, are under banked or have little or no credit history. For these businesses, there is no chance of getting a bank loan. It is with this understanding that a troika of entrepreneurs banded together to start Loan Frame.
Whenever an SME (Small And Medium-Sized Enterprises) business wants to get business loans, it can get very frustrating because most of the qualities required to get the loan are structured with big businesses in mind. This is understandable because financial institutions would like to plug into developing companies but they do not want to bear a large proportion of the risk that comes with this move. It is, therefore, a common trend that SME businesses in India have limited options when it comes to capital financing. However, this is not only particular to India as developing countries also face these impediments.
Fintech firms have been generating a lot of interest among investors and borrowers. One aspect that perhaps has not received due attention is that of career prospects, especially relative to banking.
Fintech, as the term suggests, is a combination of technology and finance. This combination serves three purposes: a) it reduces cost of providing a service; and b) it widens the reach of the said service and c) provides a better customer experience. The primary categories of professionals a Fintech firm would attract are Information Technology, Risk, Finance, and due to high growth rates and customer orientation, Sales. There are compelling reasons for candidates from these fields to choose Fintech over Banks or NBFCs. Let us look at a few of these.
In an exclusive interview with SME Times, Shailesh Jacob, Founder & CEO of LoanFrame.com, a fintech company that provides a comprehensive range of financing solutions to small and medium scale enterprises, gives a thorough picture of the SME financing situation in the country.
He adds that India, compared to its global peers, has the most neglected SME sector, which is reeling under some major challenges such as lack of funds and higher interest rates, over-reliance of banks on large corporates as a customer base and demand of collateral by the financial institutions.
With all Central legislation in place and only State level ratification pending, the stage is set for GST implementation. The 1 July 2017 target also seems realistic given that the major hurdles have been crossed.
GST will throw up many opportunities and challenges, and SMEs will be impacted to a greater extent. Under current laws small manufacturers with turnover below Rs. 1.5 crores p.a. are exempt from duties under the SSI (Small Scale Industries) provision. The corresponding exemption threshold under GST is Rs 20 lacs. Moreover, certain categories of businesses will compulsorily have to register under GST irrespective of turnover levels. This means many businesses that hitherto did not have to worry about indirect tax compliance will have to rework their way of doing business. Since GST’s primary objective is to help consolidate and streamline the elaborate (and confusing) process of indirect taxation and make it easier to administer, it is only logical that a wider tax net will and should result.
In an interaction with Dataquest, Loan Frame Founder and CEO, Shailesh Jacob talks about the company’s idea, technology SMEs and loan algorithm. Jacob divulges the current scenario of finance in the industry and what Loan Frame looks for in a skilled candidate.
Kindly put some light on Loan Frame and the idea behind it.
Loan Frame is a leading fintech company that is committed to solving the financing problem for millions of small and medium enterprises (SME) in India. Its vision is to be the country’s largest and most preferred technology enabled SME lending marketplace.
Loan Frame is a Fintech company focused on small and medium enterprise (SME) lending in the Indian subcontinent by building India’s largest technology enabled SME lending marketplace. Loan Frame is providing a technology solution to one of India’s long standing economic problems — availability of credit to Indian SME’s. Its Founder and Chief Executive Officer (CEO) Shailesh Jacob talks about the prevailing lending scenario and what his company is offering…
Loan Frame is a silicon-valley style Fintech company focused on small and medium enterprises (SMEs) lending in the Indian subcontinent by building India’s largest technology enabled SME lending marketplace. Loan Frame is providing a technology solution to one of India’s long standing economic problems: availability of credit to Indian SME’s.
Loan Frame aims to provide the right credit in an easy and friendly manner to SMEs. Customers will benefit from the right product from the right lender where they can get the maximum loan amounts at the lowest rate in the most efficient manner. Besides, it aims to provide an efficient lending experience for borrowers and make them easily accessible to lenders.
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.
In an interaction with Sujata Sangwan of BW Disrupt, Shailesh Jacob, CEO & Founder, Loan Frame, shared his startup’s journey including idea generation, description, traction details and future goals. Loan Frame is a silicon-valley style Fintech company focused on small and medium enterprise (SME) lending in the Indian subcontinent by building India’s largest technology enabled SME lending marketplace. Loan Frame is providing a technology solution to one of India’s long standing economic problems: availability of credit to Indian SME’s.