Loan and credit card marketplace Paisabazaar said in a survey on Thursday that around 70 per cent of MSMEs seeking loans on its platform were for meeting short-term needs while less than 30 per cent opted for credit to finance future business growth. The survey, analysing business loan applications made on Paisabazaar since January this year, said 45 per cent of MSME loan applications were to meet working capital expenses such as salaries and rent, pay utility bills, vendors and suppliers, indicating the liquidity concerns and short-term cash flow gaps in managing day-to-day operations.
Another 24 per cent of applications were for purchasing raw materials and maintaining inventory levels.
Most of the MSMEs applying for loans operated in manufacturing, retail, or seasonal industries, revealing that uninterrupted supply was key for them to fulfill orders and meet customer demand, Paisabazaar said in a survey statement.
The remaining applications were to finance marketing and advertising expenses (15 per cent), upgrading machinery and equipment (9 per cent), buying office or office expansion (3 per cent), paying existing loans (2 per cent), and others (2 per cent).
Geographically, the loan applications were largely from top metro cities, with Delhi NCR and Mumbai leading the charts. Together, the top 7 metros—Delhi NCR, Mumbai, Hyderabad, Bengaluru, Kolkata, Chennai, and Pune—accounted for 53 per cent of loan applications. 47 per cent of applications came from non-metro regions, with Jaipur and Surat emerging as key contributors, according to the survey.
PB Fintech, the parent company of Policybazaar and Paisabazaar, saw a 44 per cent year-on-year revenue jump to Rs 1,167 crore during the second quarter of the current fiscal while its net profit increased to Rs 51 crore vis-a-vis Rs 21 crore loss in the same period last year. Paisabazaar, however, reported an 8 per cent drop in revenue to Rs 143 crore, with loan disbursements remaining steady at Rs 4,237 crore.
In a regulatory filing on November 28, Paisabazaar disclosed that it has received notices from the Income Tax Department under Section 24(2) of the Prohibition of Benami Property Transactions Act, 1988 and a notice from the Income Tax Department under Section 142(1) of the Income Tax Act, 1961 for explanation over payments made to few vendors and their associated entities in connection with the transactions/ services provided by them to Paisabazaar.