Digital lending to the rescue of India’s SMEs looking to spur growth in turbulent times
Most Indians have a perception that lending is a negative word and understandably so. Remember Sukhi Lala of Mother India or Premchand’s classic Godaan? Such fictional impressions add to the perceived negativity associated with credit. In this competitive day and age, raising credit is imperative for business growth.
Traditionally, lending has been a highly disorganized sector. It is often a fiefdom of pawnbrokers who lend money with the surety of collateral. The other avenue has been the banks which also lay out strict compliance norms and often the need to pledge collateral. In addition, the traditional lending routes have been fraught with other challenges like extensive paperwork and a time-consuming process. Most retailers in tier-2 and tier-3 cities are left with no option but to seek financial support from the unorganised lending sector, often at high-interest rates.
That’s unfair to the large SME population in India who have contributed immensely to exports, employment and GDP. The lack of credit history, poor financial planning and bookkeeping limit their chances of securing funds via traditional routes. However, the government has done a lot to create a sustainable MSME-friendly ecosystem where adequate and alternate finance channels are made available to them and they can raise capital quickly to overcome operational bottlenecks and meet their expansion plans.
Digital lending at the point of sale is changing the lending landscape
As the pandemic created sustainability challenges for many SMEs, collateral-free loans enabled by fintech companies on their platform emerged as a great alternative. Technology has emerged as a disruptor and differentiator that has given SMEs a ray of hope.
Fintechs are enabling access to capital and empowering entrepreneurs to get credit or working capital loans in a shorter span of time as compared to the traditional lending routes. SMEs need the capital infusion to build on a new idea, buy a new store or even get more inventory. Offering collateral-free and digitally approved business loans to entrepreneurs running small and medium businesses are helping these important constituents of the national economy a great deal.
The biggest takeaway of digital lending is the quick hassle-free and paperless processing of applications that save time and the money is credited to a business quickly thereby empowering entrepreneurs to grow their business. Take no-collateral Pine Labs Flexi Credit Loans for instance. SMEs can get pre-approved credit without any documentation or creating an account or pledging collateral.
It comes with the facility of flexible withdrawal multiple times up to the sanctioned total amount. They only need to pay interest on the portion of the loan amount used up. Besides, the revolving credit limit ensures that once a portion of the amount is repaid, the credit limit is replenished.
There are no hidden charges, and no processing fees and businesses are aware of the final amount they will end up paying.
Conclusion
Leveraging lending capital for SMEs can help entrepreneurs keep up with the demands of a growing business. Immediate access to the funds can be a gamechanger and Pine Labs is committed to lending a helping hand.
(The author of this article is Vinisha Kataria, Digital Content Manager at Pine Labs. Views expressed in this article are that of the author.)
