Reimagining Lending to SMEs

FlexiLoans was began in 2016 with an endeavour to unravel the issue that SMEs face in accessing quick, flexible & adequate funds for growing their businesses using digital and alternate datapoints. “There are 70mn+ MSMEs in India which contribute 29% to the GDP of the country. Nevertheless, access to finance for these MSMEs has been limited attributable to lack of digital data, lack of assets, and transparency for financial institutions to offer access. The highest 5% have access to finance through PSU banks and enormous NBFCs, however the tail-end customers don’t have that access,” says Deepak Jain, Co-founder, Flexiloans.

The four-year-old startup has built a platform that gives capital to those tail end customers in a 100% digital format in lower than three days and with minimal documentation while leveraging alternate data. The technology platform at FlexiLoans is built inhouse and is designed to be the platform to enable lending for any lending ecosystem.

So, what is the secret sauce of FlexiLoans? “Our secret sauce is our risk models that are trained over tens of millions of records to accurately risk price the unsecured MSME loans in India. We’ve built advanced algorithms to coach our risk models and keep them updated with latest macros and micro trends. We even have built advanced set of APIs which permit us to deeply embed into partner ecosystems to offer lending solutions to SMEs on these platforms,” says Jain.

Regarding stepping up efforts to retain customers, Jain tells. “Of the whole $300bn, captured market is barely $2bn by all fintechs combined. Due to this fact competition will not be a constraint. The larger problem that we want to unravel is how can we reach and sustainably lend to customers within the remaining $298 bn market. We attempt to be certain that each customer we onboard on our platform is given the correct form of credit to assist his/her business grow.”

The startup has been profitable at a comparatively early AUM in comparison with its peers attributable to its high operating leverage built on a frugal business model.

In line with Jain, regulations in our industry are a must since lending is a really sensitive sector. “The RBI has been a really supportive and understanding of the needs of the emerging fintech business models and has kept pace with developments. The truth is, Indian regulations are probably the most mature globally and we expect the RBI to maintain heralding the Indian fintech sector as a shining light to regulators globally.”

Jain believes perseverance and grit is the foundational trait required for entrepreneurs. “As a bunch now we have passed through multiple economic troughs in the shape of GST, demonetisation, ILFS crisis and Covid and what we learnt from these was perseverance and grit albeit in time bear the sweetest fruits.”

“We don’t think that growing at breakneck speed in a lending business could be very smart. We have been very calculated in our risk / growth tradeoff strategy and can proceed to achieve this,” Jain adds.

The subsequent goal of FlexiLoans is to cross INR 10,000 crore in AUM by 2025, and be amongst the highest 5 pure play SME lending institutions within the country.

Factsheet