B2B marketplace TradeIndia ventures into MSME lending and aims to disburse Rs 100 crore by next fiscal year

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Credit and financing for MSMEs: New Delhi-based B2B marketplace TradeIndia is branching out into MSME lending with the launch of TradeIndia Lending, a digital lending solution for small businesses.

On the rationale for the launch, Sandip Chettri, CEO of TradeIndia, told Financial Express Online, “Last year in June, after the second wave of the Covid pandemic, we surveyed 50,000 SMEs and found 83% of respondents confirming their inability to obtain credit in a timely manner. This made us wonder if we could be a one-stop solution for SMEs, where we go beyond just accessing a market by helping them as well fundraising for their next big order.”

MSMEs in India face a colossal credit gap of Rs 20-25 lakh crore and some of the major reasons for lack of access to capital are lack of collateral, incomplete books of accounts, preference for cash transactions cash and lack of credit history.

“Because we have the transaction history of buyers and sellers on our platform, we can act as guarantors for them,” Chettri said. TradeIndia did not release the names of any lending partners, but said they are currently in talks with several NBFCs and banks.

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The B2B e-commerce platform would make the initial screening of MSMEs for loan eligibility based on their transaction history, turnover, CIBIL score and balance sheet. It would also charge a processing fee for screening the loan and also a portion of the debtor’s interest. “There will also be intangible benefits as MSMEs will find more value on TradeIndia and their membership of our portal will increase,” Chettri said.

TI Lending will start with three products in the first year: a working capital loan, a supply chain finance loan and a subscription-based offering for MSMEs who opt for TradeIndia’s products for digital transformation. The loan value for all these products can be up to Rs 25 lakhs with an interest rate starting from 16%. “We suspect that most small businesses asking for these products would come from Tier 2 and Tier 3 markets, as MSMEs in metropolises typically seek higher value loans,” Chettri added.

A pilot was made to test the waters and TradeIndia received a total of over 2,000 applications in the first 10 days for which they dispersed an amount of Rs 55 lakhs. The number of MSMEs Rs 55 lakhs given was not shared.

On growth plans, Chettri said, the target is to shell out Rs 100 crore to over one lakh MSMES by March 2023.

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