September 11, 2018

Alternative SME Lending Solutions: Going an Extra Mile to Serve New Segments

Despite the significant contribution in strengthening countries’ economic growth and driving the engine of employment generation, the SME sector still toils to procure working capital owing to the unavailability of sufficient documents to demonstrate to the banks. Information with regard to the USP of business, balance sheet, products description, history of business operation, and business projection for the next three to five years define the creditworthiness of the borrower. Failure of submitting all the documents minimizes the chances of getting the loan approved. Even if the credit is available, the cumbersome loan disbursement process of banks and exorbitant interest rates put immense pressure on growth prospects. Though banks do not have a dearth of money, they lack a proper risk management framework to assess the creditworthiness of small businesses (due to information asymmetry). The unmet SME lending requirements, however, present huge opportunities for new-age alternative lending providers to intrude into…

Leave a Reply

Your email address will not be published. Required fields are marked *