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‘Alternate lending platforms have digitised the entire process facilitating loan disbursements’

Indifi is a technology platform that gathers and analyses data of businesses from various sources and draws insights to judge its credit worthiness and current performance in context of the industry it is operating in. Rana Vikram Anand, president, Indifi Technologies discusses ways in which it’s disrupting the restaurants and travel sector to bridge the gap of working capital in the space and save restaurants from running into a situation of negative working capital. By Tanuvi Joe


Why should one choose digital lending platforms over conventional lenders?
Just a few years back, it was impossible to get a loan sanctioned in India just by filling and submitting a loan application online. However, alternate lending platforms have digitised the entire process facilitating loan disbursements in less than 24 hours. This is indeed a boon for startups, small business owners, and entrepreneurs who found it highly difficult to avail a loan in the traditional banking sector because of lack of data, collaterals and credit history. Digital lending platforms are working towards bridging the gap in MSME Debt Financing through technology and data leverage and mobility of capital in multiple ways:

• Distribution – Traditionally, distribution was facilitated through feet-on-street origination, involved high screening costs, and high touch process. It was perceived as not scalable due to geographic dispersion. Whereas, digital lending platform such as Indifi work only through existing supply chain relationships and hence the access to SMEs is through Indifi’s channel partner associations. Currently, Indifi has several partnerships including Swiggy, Travel Boutique Online, OYO, etc., through which, Indifi facilitates ‘no or low cost’ of acquisition of customers.

• Borrower eligibility and underwriting – Traditionally for the MSME segment, lenders have always faced a constraint in underwriting loans as tax compliance is typically low and a credit manager is an expensive resource. Digital lenders apart from considering income and credit scores, also consider other factors like public data, business partnerships, education levels, professional background, and potential future earnings to determine creditworthiness. Also, in the current scenarios, there is no real need to verify the existence of the business through a physical visit and the same can be carried out by mapping the digital footprint of the business by the use of data and technology making process efficient.

• Processing and customer experience – Banks take weeks and sometimes even months to process your application and disburse the required funds. Digital lenders, on the other hand, process your application within hours and the funds reach your bank account within a few working days, mostly just two to four days. This is done through automated data collection and algorithms making the entire process automated and entirely online. This is highly ideal, especially when you want funds immediately.

Why is there a need for effective management of working capital?
Working capital is the biggest challenge for small businesses. If we consider the travel agency business, we’ve noticed that the settlement cycle for travel agents has been constantly shrinking. Currently, it is under seven days for scheduled airlines, whereas low cost carriers charge full payment in advance at time of booking. The travel agents, on the other hand, in order to retain business, have to offer soft credit to their corporate customers. The time taken by them to settle the payments for their travel bookings could range from a few days and even extend to 60 days. This creates a working capital gap, limiting the travel agency’s ability to grow. Our customised product offerings have proven themselves to fill this working capital gap effectively and efficiently.

Similarly, there are smaller hotels and guest houses in the hospitality segment, which are mostly denied loans on grounds of low volume of transactions, limited geographical area of operations, or even considering the seasonal nature of the business. A majority of these hotels have a considerable growth potential, but aren’t able to tap into the opportunity given their financial constraints. Also, the number of consumers in the travel and hospitality segment is growing with an exponential rate and maintaining inventories to cater to their growing demands. This makes effective management of working capital vital for a sound business growth and that’s when easy financing options extended by Indifi come in handy.

What are the solutions provided by Indifi to address this need?
Besides servicing the identified customer segments, Indifi also supports the MSME / SME market cutting across segments with merchant cash advance and invoice discounting products.

Our invoice discounting product enables businesses to convert their unpaid invoices of up to INR 2 crore into liquid cash. The loan is approved instantly and requires minimal paperwork. It can, moreover, be availed by business enterprises that have been active for less than a year. We have received more than seven-fold growth for the unique invoice-based loan product over the past seven months, underlining its extensive demand. Further, our merchant cash advance product is simple, easy to deliver and well suited to merchants across industry segments and geographies. It provides easy loans which are paid directly through daily deductions from the swipe machine transactions.

Which loan solution is apt for restaurants and travel business and what are the unique features that will help the customer for a smooth loan process?

Indifi is disrupting the restaurants and travel sector and bridging the gap of working capital in the space. Travel, hospitality and restaurant businesses for instance have their own needs pertaining to working capital requirement due to factors such as online booking facility, credit to corporate client, bulk bookings, etc. Indifi’s product innovation facilitates customised loan design depending on specific needs for a business. Product innovation in lending such as invoice discounting is an alternative to traditional business loans which gives you instant access to cash locked up in your outstanding invoices. You don’t have to wait to get paid by your clients – you can instead get money immediately against your invoices through Indifi’s invoice discounting facility. This is much more flexible than term loans or overdrafts, and is an excellent solution – whether to improve cash flows, manage late payments, or keep up with seasonal demand.

What are the future plans for Indifi?
We will increasingly focus on developing our underwriting model to have a good control on risk and heavily invested in improving the customer experience using technology. In addition to our current focus areas, we are also exploring new market segments such as logistics, healthcare, specific B2B operations and the development of specialised product offerings is in the pipeline to support these market segments as per our product rollout schedule.

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