It’s quite common that people go broke during month ends, which in turn would alter the way they spend their money—pushing them to cancel travel plans, party plans and more. Or, one may borrow money from friends, relatives or banks, to proceed with the plans.
A Pune-based financial technology startup Early Salary is trying to solve this problem; it aims to support salaried professionals to overcome their mid-month and month-end financial needs. The company provides unsecured loans from as low as Rs 10,000 up to Rs 1 lakh for upto 30 days with an interest rate of 0.09% a day. (That’s Rs 9 for every Rs 10,000).
The company is co-founded by Akshay Mehrotra (CEO), Ashish Goyal (CFO) and Jay Jain (COO); it is backed by Ashok Agarwal of Transcorp Group. With less than two months of operation in Pune and Bengaluru, the startup has seen 37,000 app downloads already. “One day I was travelling with my team and they said it was month-end and they don’t engage in parties as they had a financial crunch. There was no solution to it. Post that I personally met 500 people, and understood the reality. Borrowing from banks was expensive and it was not immediate. That’s when we thought there is a great potential in this segment and we started Early Salary,” Mehrotra said.
Early Salary operates purely with interest income as the revenue model. Mehrotra said, “We provide instant cash to you. It takes less than 5 hours for us to disburse money to the borrowers for the first time and less than 10 minutes from second time onwards. It’s a great solution to replace salary advance and short-term bank loans. That’s the key essence of our product.”
The startup analyses the credit score along with the social ranking of the individual. It checks the social media profile like LinkedIn and Facebook to decide on lending loans to people. It also uses GPS to track the area where the person lives and analyses his capability depending on the rentals in the region.
The CEO says people would not lie about their profile on social media sites and hence it becomes an important
element of the checkpoint for them in the present days.
Also, unlike the banks, which give loans for a particular window period, here, one can repay the loans even the very next day and need not pay pre-closure charges. And it makes it hassle free. As long as one is salaried, has a bank account, and is active on Facebook and Linkedin, one can easily get a loan from Early Salary.
For instance, Vinayak Das, an IT professional in Pune had changed his job recently and was finding it difficult to get loans for his personal need without three months of salary slip. He then downloaded the app and says he has borrowed twice up to Rs 30,000 in the last two months.
Going forward, Early Salary targets to have about 100,000 acquired customers in the next three years with a book value of Rs 300 crore a month.