Credit & Finance for MSMEs: PayPal, a digital payments firm, is now providing collateral-free business loans to Indian merchants that use its services to sell cross-border. Via its small business FlexiLoans digital lending network, the organisation will provide credit to MSMEs, women entrepreneurs, sole proprietors, and freelancers. MSMEs and others will be given working capital loans ranging from Rs 50,000 to Rs 1 crore for business growth, stock purchases, inventory purchases, and other business-related expenses. The interest rates will start at 1% per month with a period of up to 36 months, depending on the borrowers’ credit scores. Loans are currently available to 10,000 PayPal merchants.
“The Coronavirus pandemic has had a significant impact on economic activity across India, and now is the time for our MSME and freelancer communities to seek solutions to help them restart their businesses… In a statement, Anupam Pahuja, Vice President – India, Southeast Asia, Middle East, and Africa, said, “Our partnership with FlexiLoans.com and combined expertise will allow us to reduce the current credit gap while accelerating growth for cross-border sale and fast-tracking the Vocal for Local and Digital India vision.” More than 300 million customers and merchants in more than 200 countries have used the PayPal app. Last December, the company announced a partnership with Razorpay, an online payment portal, to allow international payments for MSMEs and freelancers.
FlexiLoans, on the other hand, has partnered with over 100 companies to provide credit to small businesses, including Flipkart, Amazon, PineLabs, MSwipe, and others. “We are extremely excited to partner with PayPal because of our advanced Data science models and deep experience in assessing millions of MSMEs with digital footprints,” said Abhishek Kothari, Co-Founder FlexiLoans.com. The company has disbursed unsecured loans worth over Rs 1,000 crore in the last four years, despite receiving over 10,000 applications each month, mostly from Tier III and Tier IV cities in India, and disbursing about 50 crores per month.
FlexiLoans has so far raised Rs 500 crore in debt and equity capital. The Sanjay and Falguni Nayar Family Office led a Rs 150 crore equity and debt financing round last year. The organisation claims to have seen a 200 percent rise in disbursements, a tenfold increase in customer retention, and a 45 percent increase in repeat lending from current customers.
On the back of growth in retail electronic payment systems such as National Electronic Fund Transfer (NEFT), mobile banking, and the creation of payment acceptance infrastructure, India’s digital payments industry is expected to grow at a CAGR of 27% over the FY20-25 era. According to the India Trend Book Report 2021 by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young, digital payment transactions are expected to increase from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25.