Lendingkart
Many small businesses in India have dreams of scaling to new heights. However, these dreams are often limited by real problems like low access to credit and difficulty in obtaining financing. A major challenge in this area is the collateral requirements. Most formal lending institutions require significant collateral from businesses. For small ventures without any major assets, this may be a difficult criterion to meet. As a result, micro, small, and medium enterprises (MSMEs) in India may be ineligible for traditional loans.
Lendingkart aims to resolve this complex issue by offering a simple solution for growing businesses. The technology-based lending platform offers collateral-free loans for eligible MSMEs. This makes it easier for such ventures to obtain funding, even if they do not have substantial assets to offer as security.
Challenges with Traditional Lending
Traditional lending channels have been around for decades now. And while they have no doubt helped a vast number of businesses receive the funds needed for growth, they are also riddled with certain core challenges.
- Slow Approvals
Conventional lending institutions take longer to review applications and approve or reject them. For MSMEs that need time-sensitive financial assistance, this may not be a very suitable option.
- Rigid Collateral Rules
Traditional lenders also have rigid collateral rules and requirements. For MSMEs run by individuals without any substantial assets, such financing may be difficult to obtain.
- A Lack of Access in Tier 2-3 Cities
Many traditional lenders also do not have a strong presence in Tier 2 and Tier 3 areas. So, MSMEs in these markets cannot easily access the loan products offered by such lenders.
These challenges have made it harder for MSMEs, particularly in areas not covered by formal lending channels, to obtain the financing they need to scale. As a result, many growing businesses find that they cannot sustain operations and are forced to either close down or resort to high-interest, predatory informal loans.
Technology-Driven Lending
Traditional lenders typically require data like business vintage, revenue, and credit history. However, new businesses and MSMEs that have just been established may not have credible data in these categories. So, they may be ineligible for traditional loans. Here is where Lendingkart's technology-driven lending can make a difference.
This lending platform uses artificial intelligence (AI) and machine learning models to streamline the way applicant risk is assessed. So, even if newly established businesses lack sufficient credit history, they can be assessed based on other relevant data like GST records, banking statements, and digital transaction trails. Since almost all MSMEs - even those that are relatively new - have these details, they can easily be brought within the ambit of India's formal lending network.
Additionally, by using such tertiary data to assess businesses for their risks, Lendingkart also makes the process of loan appraisal and disbursement faster. The time from applying for funding to receiving it is greatly reduced. Once a business is found eligible, the required funds are instantly credited to the SME's bank account. The data trail is also more accurate in these cases, and the paperwork is minimised to a large extent.
Instant Disbursement & Benefits
Instant loan disbursement is a very underrated benefit of technology-driven lending. For small businesses that are struggling with cash flow bottlenecks, timely financial assistance may be crucial. The longer the lender takes to disburse the loan, the more the chances of the small business being unable to sustain its operations.
This is why timely disbursement makes a huge difference in working capital financing. With financing available to them promptly, MSMEs can use the funds to meet various use cases, like the following:
- Inventory Purchase:
When they have the funds available, MSMEs can stock up on seasonal inventory or even make bulk purchases at discounted rates. They can take advantage of limited offers from suppliers and cash in on beneficial deals. It also helps avoid stockouts.
- Business Expansion
Business expansion opportunities may be lost if an MSME does not have the funds available at the right moment. Instant disbursement helps growing businesses avoid this pitfall. They can capitalize on growth avenues as and when such opportunities arise.
- Payroll
Finding the right talent is hard, but retaining that talent can be more challenging. If small businesses fail to meet payroll expenses promptly, local talent may quit. Word of mouth may then make it harder to find replacements for the position. Fortunately, timely loan credits can help avoid this issue.
Impact and Reach
In addition to speed, Lendingkart's loans are also collateral-free. This means MSMEs need not offer any assets as security to the lender. For many growing businesses, this can be a relief. Such collateral-free loans democratize finance in India, especially for first-generation entrepreneurs who have no historical goodwill or data trail to rely on.
By making it possible for growing businesses and aspiring entrepreneurs to access unsecured credit easily, Lendingkart has increased financial inclusion in India. Enterprises that were once outside the ambit of formal lending channels have now been integrated into the ecosystem. They can rely on transparent lending instead of resorting to high-interest informal loans.
Ultimately, this translates to improved scaling and growth for MSMEs. The greater the heights they reach, the better it bodes for India's economy at large.
Conclusion
Lendingkart's collateral-free digital lending is revolutionizing how MSMEs access capital in India. By eliminating traditional barriers like security requirements and lengthy approval processes, this technology-driven lending platform is making financing more available than ever before.
Looking at the big picture, it is clear that Lendingkart has emerged as a trusted partner for small businesses seeking growth capital. With such modern lending solutions, small businesses can now focus on growth instead of securing collateral. This creates new opportunities for entrepreneurs in India and accelerates the country's overall economic development.
Disclaimer: Loan information is provided for general purposes only and does not constitute financial or legal advice. Terms and eligibility are determined solely by the lending institution. Borrowers should review all documents carefully and seek professional advice before making decisions.
