Fintech startup, Capital Float assists SMEs scaling up their business in securing requisite capital online. Recent reports have revealed that the platform dispensed around ₹1,000 crore under the loan category in just 10 months, including January’17. Capital Float now eyes a target of ₹5,000 crore disbursement for the coming year, reports LiveMint.
Capital Float recently raised close to ₹17 crores in a funding round led by IFMR Capital Finance and its alternative investment fund in February. The company raised money by allotting non-convertible debentures (NCDs). With massive capital in hand, Capital Float can fulfill its own expectations informally.
At the time of funding, the company revealed its plans of lending the fresh capital to existing and new small and medium enterprises (SMEs) on its platform. The same lines up with Capital Float’s current proposals. To increase the lending rush, Capital Float also aims to introduce more loan products and increase marketing spends.
Gaurav Hinduja, Co-Founder, Capital Float said,
The biggest push for the year (2017) will be our foray into the kirana (stores) segment, the small mom-and-pop shops… we have begun a pilot with providing loans to these kirana merchants of a few payment aggregators such as Paytm, Oxigen, and Itzcash.
It will further extend corporate partnerships for borrower acquisitions. Capital Float has already partnered with e-commerce websites such as Snapdeal, ShopClues and others like Paytm and Uber. The company will provide loans to the traders and merchants that work with these companies; hence upgrading its loan book via third parties. Similar services will be released for educational institutions and small retail shops in future.
For the year, 2016-2017 the company till now lent capital to around 7,000 borrowers. The company will finance about 20,000 of such small borrowers which will include 10,000 Kirana stores and 60% remote area situated debtors.
Commenting on the pricing model, Sreedhar Prasad, partner e-commerce at KPMG India said,
They would already have established financial arrangements with their supplier, and not all are transacting online. Most of these store owners would be above 40-45 years old and may not easily adapt to the online way of borrowing.
The company explained the growth of loans with an incline in taxi finance product targeted at drivers in Ola and Uber. The product grew by 5 times and resulted in small but a lot of loans. Capital Float also credited a product called Pay Later targeted at traditional SMEs — a 60-day loan for B2B (business-to-business) companies which are part of large supply chains.
The average loan offered by Capital Float is ₹10 lakh, at an interest rate of 16-19% to a merchant. The loan extends over a period of three years and 60 days. However, loans to retail stores are limited to ₹50,000. The platform dismisses the need of collateral and significant revenues or years of experience. Presently, loans to e-commerce sellers and SMEs constitutes 33% of the total book for Capital Float.
