Micro, Small, and Medium Enterprises (MSMEs) form the backbone of the Indian economy. Conclusive evidence points to MSME sectors highly contributing to GDP and employment. However, most MSMEs face perennial access to credit challenges. Irregular cash flows, lack of collateral, and poor credit history deter lenders from making loans to such firms. Lendingkart has filled this gap by being one of the prominent fintech players portraying innovative solutions bridging the gap. Here is how Lendingkart is leveraging technology to overcome the hurdles of cash flow-based lending to MSMEs.
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1. Harnessing Technology to Transform Credit Assessment
Lendingkart has leveraged a tech-driven approach to compute the creditworthiness of an MSME. No longer are MSME businesses relying on age-old methods to credit score and collateral. Instead, using big data analytics, ML, and AI in the firm computes thousands of pieces of data relating to a business, including:
- Bank transactions
- Tax return
- Online rating
- Vendor cheque payment
This detailed assessment allows Lendingkart to estimate the financial well-being of an applicant accurately that cash flow-based lending becomes more feasible. For MSMEs whose income streams are volatile, this method ensures easy evaluation, and it breaks those barriers posed by traditional lending.
2. Quick processing of loans
Time is also money for MSMEs. Lendingkart has brought down the processing time dramatically through its digital platform. By using proprietary technology, Lendingkart completes the entire journey-right from application to disbursal-within 72 hours, where this takes weeks in the case of a traditional bank. This is very handy for companies requiring urgent liquidity.
Some of the salient features of the Lendingkart platform are:
- Fully paperless application processes
- Automated underwriting systems
- Instant eligibility checks
By reducing human intervention, Lendingkart ensures faster and unbiased choices and cash flow-based loans.
3. Flexible Repayment Structures
MSMEs are subjected to stiff repayment cycles by traditional lenders. At Lendingkart, on the contrary, business cash flow-based flexible repayment is practiced. More precisely,
- Seasonal repayment plans for a periodic revenue of businesses
- EMI-free loans wherein businesses pay interest on a monthly basis and principal at the end of tenure
This flexibility enables MSMEs to manage their funds better, thereby avoiding the possibility of becoming insolvent and also ensuring business sustainability.
4. Extending reach through Co-Lending Partnerships
Lendingkart’s ability to reach MSMEs has been further amplified by collaborations with mainstream financial institutions. To illustrate, the company combines the technological expertise of Lendingkart with the financial muscle of its co-lending partners such as Mahindra Finance. These collaborations have helped achieve the following objectives:
- Competitive interest rates
- Under-served geographies
- Simplification of loan disbursal
Pooling resources enable Lendingkart to pass on the benefits of timely credit to even the most remote MSMEs.
5. Data-Driven Insights for Risk Mitigation
Risk of default is one major challenge in cash flow-based lending. Lendingkart negates this by using advanced predictive algorithms that are continuously on the lookout for trends within borrower behavior. Alerts from potential risks, such as irregular repayments or declining revenue, will keep Lendingkart on an alert watch. It would pre-empt such issues for both the lender and the borrower.
6. Financial Literacy Promotional
Beyond credit access, Lendingkart invests in financial literacy for the MSMEs. It is teaching business owners how to better improve on financial planning and credit management as well as how to access digital tools. This empowers the MSMEs to make better, more informed decisions, thus enhancing repayment while the ultimate angle will be long-term financial sustainability.
7. Inclusivity and Financial Inclusion
Lendingkart has serviced most of its customers who do not have access to traditional banking services. It democratizes credit access because of its digital-first model and zero collateral requirements. This means India can actualize financial inclusion at a higher level, and even first-time borrowers with hardly any financial documentation can scale their businesses.
Conclusion
With cash flow-based lending innovation, Lendingkart truly alters the credit landscape for India’s MSMEs. On technological strength combined with partnering and flexibility, Lendingkart responds to the issues that affect India’s small businesses better in a more holistic and integrated manner. It is focused on quick, transparent, and inclusive lending, ensuring much-needed financial support reaches MSMEs-the lifeblood of the economy.
While scaling its operations and refining its offerings, Lendingkart brings to the forefront how fintech can make differences in meaningful ways for addressing all the longstanding credit challenges of MSMEs. With Lendingkart leading it, cash flow-based lending does seem really promising.
For further details of all such initiatives that Lendingkart is undertaking, visit their official website and also check out recent partnerships and technology upgrades.
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