NBFC loans to MSMEs: NBFC lender to MSMEs CredRight on Thursday announced raising Rs 78 crore in a mix of equity and debt funding from the non-profit organisation Michael and Susan Dell Foundation. According to a release by the company, the equity part was led by the foundation with participation from existing investors such as YourNest, Spearhead Capital, 9Unicorns and AccionVenture Lab. The debt part of the capital included investors viz., Blacksoil, Caspian Debt, RevX Capital, and Westen Capital.
Founded in 2016, CredRight, which provides institutional debt funding to nano enterprises in Tier 3 and Tier 4 towns, said it will utilise the funds to expand to new locations and improve its technology stack.
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Citing the Reserve Bank of India (RBI), the company noted that fewer than 10 per cent of MSMEs in the country currently have access to formal finance. To enable access to formal credit, CredRight said it utilizes physical distribution channels and underwrites loans based on analyzing small businesses’ cash flows, chit-fund statements and agricultural incomes.
“We have served more than 5,000 nano enterprises, and this fundraiser will help us expand our reach exponentially. Our phygital (physical+digitl) model, unique underwriting ability & deep understanding of nano enterprises helps us reach remote areas and provide meaningful loans whilst ensuring profitability,” said Neeraj Bansal, Cofounder, CredRight.
According to the company, its Assets Under Management (AUM) has grown 10x over the past three years and it plans to reach the Rs 2,000-crore AUM target in the next three years.
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“The financing gap is wider still for nano entrepreneurs, businesses with an annual turnover between Rs 1 and 10 million. These growing businesses account for approximately 20 per cent of the MSME segment yet over 90 per cent of them lack access to formal financing from traditional lenders. These entrepreneurs are the future of India, and Credright is creating opportunity for them, their families, and their communities across the country,” said Geeta Goel, Country Director, Michael & Susan Dell Foundation.
Fresh unsecured business loans by NBFCs rose 24% YoY to Rs 33,915.3 crore as of March 31, the latest data by the Finance Industry Development Council and CRIF High Mark showed. A report by TransUnion CIBIL and Sidbi shows that more MSMEs prefer NBFCs for their financing needs.