It is small wonder that Micro, Small and Medium Enterprises (MSMEs) consist the backbone of Indian economy. Unfortunately, less than 10 per cent of Indian MSMEs are institutionally financed in a market with over 3.6 crore such enterprises.
Loan Frame was started with an aim in mind – help borrowers access the right kind of business finance in the minimum possible time. Towards this end, we are creating the largest SME lending marketplace. We harness the power of technology to make this happen. We want that getting business loans for small businesses should be a quick, easy and transparent process as against the largely slow, painful, and opaque process that it is currently.
Window shopping is taken very seriously by some shoppers when they visit markets or malls. This isn’t surprising when it comes without any costs attached. Not so much when you are in the market for a loan for your small business. Each window you stop at ends up making you and your small business a little less credit worthy.
Two of India’s biggest economic problems faced by small and medium enterprises (SMEs) – one poor credit availability and second high cost of credit, can be solved through technology enabled SME lending marketplace, believes Shailesh Jacob the Founder and Chief Executive Officer (CEO) of Loan Frame.
Despite their importance to the Indian economy, MSMEs suffer institutional neglect with access to financing at a reasonable cost being one of the key pain points for small businesses. However, a combination of realisation of the importance of this segment, improved risk appetite, and innovations in the channels linking borrowers with lenders is slowly but surely changing things for the better.
‘Digital India’ is much more than a political slogan. At its core, it is the belief that technology can help improve access to services for hitherto neglected segments of society and the economy.
One such segment is SMEs. Technology is already revolutionizing lending in India and it can bring a true disruption in SME lending, which is ripe for improvements. Measuring borrower risk accurately is something that lenders have always struggled with. This gets trickier with smaller businesses given that such these borrowers do not always have organised revenues and expense trails.
Optimising Your Small Business Loans With ‘Debt Consolidation’
The title quote could apply just as well to your loan book as it does to Rowling’s book! Habitually, borrowers have preferred to borrow from multiple sources, in multiple forms. A Term Loan from Bank ‘A’, a Working Capital Facility from Bank ‘B’, a Loan Against Property from NBFC ‘C’, an Overdraft from Bank ‘D’, and so on. The reasons for doing so are varied: changing needs over time that require additional borrowing, perception that distributing the lender base and type of loans increases borrowing ability, and a false hope that the true extent of leverage cannot be clearly assessed by a new lender.
Some of these reasons may have been valid in a pre-digitisation era and in a time when credit scores and records were not consolidated in one source. However, these perceived advantages have been rendered totally irrelevant now.