Micro-lending platforms are a steady success in India. Mumbai-based digital lending platform SMECorner has secured $7 million in a mixed round of equity and debt from Capital First, existing investor Accion Ventures, and a clutch of high net worth individuals.
Capital First has put in the entire debt portion (Rs 25 crore) and has infused Rs 12 crore (out of 22.5 crore) worth of equity investment. It will hence acquire a 14.2 per cent stake in the SMEs-focused lending platform.
Following the deal, SMECorner will get direct access to Capital First’s debt pool for scaling its operations. The loans originated by the company will be booked on Capital First’s books with a risk-share agreement in place. Thus, they will get a service fee for the loans.
The funds will be essentially allocated towards scaling up the company’s loan book. This will be done by expanding its offline branches and leveraging technology.
Started three years ago, SMECorner offers loans to small businesses across retail, manufacturing, and trade (including wholesale and B2B). Pivoted to NBFC from a marketplace model, SMECorner claims to have about 700 customers on its loan book and so far disbursed around Rs 45 crores.
With an average ticket size of Rs 6 lakh, SMECorner offers loans at interest rates of 19-26 per cent depending on the size of loans.
The firm got the NBFC licence from RBI in February this year and aims to grow its loan book to about Rs 400 crore by the end of FY19 and to Rs 1,500-2,000 crore by the next fiscal year.
With the fresh funding, SMECorner will leverage the Capital First reach to increase its customer base. It is also in talks with a few B2B platforms to enable loans for their participant vendors.
In May, last year, SMECorner had raised an undisclosed bridge round of funding from a Dutch government fund.
The development was first reported by ET.