Credit and Finance for MSMEs: Small business lender Lendingkart, which offers business loans and working capital loans, has raised $15 million debt for its NBFC arm Lendingkart Finance from the Netherlands-based entrepreneurial development bank FMO that manages funds for the Ministries of Foreign Affairs and Economic Affairs of the Dutch government. The investment has been raised via non-convertible debentures and has taken the company’s cumulative exposure to $19 million with this deal. “With the new funding, Lendingkart has targeted to reach out to over 5,000 new MSMEs with a focus on women entrepreneurs and small businesses. The new normal is about sustainability and stable business for which Lendingkart has raised this debt to empower MSMEs realise their plans and achieve the Bharat financial inclusion goal,” Harshvardhan Lunia, Co-founder and CEO, Lendingkart told Financial Express Online.
Even as India experienced one of the strictest lockdowns due to the Covid pandemic impacting businesses particularly MSMEs with limited working capital available and access to finance, there is no government data available for the number of Covid-hit units. While multiple schemes were announced by the Centre to help Covid-hit MSMEs recover, “however, as MSMEs are there in both formal and informal sector, data regarding temporary or permanent closure of the units are not maintained by the Government of India in Ministry of Micro, Small and Medium Enterprises (MSME),” MSME Minister Nitin Gadkari had said in a written reply to a question in the Rajya Sabha.
Lendingkart, which has disbursed over 1 lakh loans to more than 91,000 MSMEs so far through its NBFC arm, will deploy the capital raised towards expanding the reach of its financial products across around 100 sub-industries in the MSME segment in India. “By FY22, Lendingkart has planned to onboard around 1.25 lakhs MSMEs on its portfolio driving the most-watched segment for an accelerated growth,” added Lunia. The company is targeting 40 per cent growth over pre-Covid financial year and will be launching key products this year, he said. Its investor FMO supports sustainable private sector growth in developing countries and emerging markets.
The total fundraising by Lendingkart before the current round stood at $242.5 million with investment from Mayfield Fund, India Quotient, Saama Capital, Alteria Capital, Bertelsmann India, Fullerton Financial Holding, others as per Crunchbase. The company had acquired the online lending marketplace for personal loans KountMoney in 2016.
The investment raised by Lendingkart also comes amid the government’s crackdown on lending or loan apps offering instant credit online. The Ministry of Electronics and Information Technology (MeitY) had recently blocked 27 lending apps under Section 69A of the Information Technology Act, 2000. The information was shared by MoS Finance Ministry Anurag Singh Thakur in the Lok Sabha earlier this week with respect to the government’s move towards dealing with fraud Chinese lending apps operating in India. However, the names of the blocked loan apps weren’t shared in his reply. The digital lending value in India had jumped from $33 billion in FY15 to $150 billion in FY20 and is likely to grow to the $350-billion mark by FY23, according to Statista.