Loan Frame: Solving the Financing Problem for Indian SMEs
Borrowers can apply for a loan by logging onto Loan Frame’s website or by downloading its Android app. The company does detailed assessment of the needs of the SMEs and then provides the right solutions for the SMEs, at the most competitive interest rates
Photo Credit : Shailesh Jacob,
Loan Frame was launched in mid-2016 with the objective of redefining the experience of borrowing by SMEs in India. The Company is India’s first lending marketplace fully dedicated to SMEs. Loan Frame caters to the varied loan requirements of SMEs up to Rs. 50 crores. The company differentiates from its peers with its wide set of lending products to cater to almost all needs of small and medium sized businesses.
Founded by Shailesh Jacob, who previously helped Copal Amba build from a start-up to #1 firm globally in the financial research & analytics with over 2900 professionals and 200 institutional clients, Loan Frame has raised funding of US$ 2.25 million in a seed round led by Vedanta Capital. Co-Founders Rishi Arya and Akshun Gulati have deep experience in the financial services space.
This digital fintech brand is leveraging technology to make SME financing more readily available. In a short period of time, the company has developed cutting edge technology including an ecosystem of a mobile app, web applications, proprietary core systems, third party tools, integrations with lenders to smoothen the loan process for small businesses. The team has merged world class technology and processes of global financial institutions to considerably reduce SME loan processing time from the current several months to a few days. “Some of our borrowers get instant approval on their business loans and their loans gets credited to their bank account without having them to visit any bank branch even once. We are striving to bring similar experience to all our customers”, says Shailesh Jacob.
Borrowers can apply for a loan by logging onto Loan Frame’s website or by downloading its Android app. The company does detailed assessment of the needs of the SMEs and then provides the right solutions for the SMEs, at the most competitive interest rates. One way Loan Frame distinguishes itself from any other marketplace is by its technology and its credit team that is headed by a former Credit Head with one of the leading financial institutions in India. “We provide the right loan counselling to our customers including the most prime SMEs. This ensures that all our customers get personalized advice specific to their funding requirements and financial positioning. Our lenders, who are some of the leading banks and NBFCs, also feel very comfortable looking at applications that have been assessed by our technology and team”, says Jacob.
The company is looking to change existing perceptions that an SME’s current bank is the best place to get a loan. Many a times existing lenders are constantly limited by their own costs of capital and a marketplace such as Loan Frame might be able to provide the product and right lender at the most competitive pricing vs. one’s own bank. Many SMEs also use informal agents to help with their loan requirements whilst now they have the option of this highly sophisticated platform that can assess their needs across a large number of banks and NBFCs.
As part of its marketing plans, in additional to digital origination, the company is expanding its Corporate Partner program where it partners with the finance teams of large corporates to meet the financing needs of vendors, dealers, distributors, merchants and other ecosystem participants. The company is also investing in its Business Partner program where it partners with various Chartered Accountants, Company Secretaries, Wealth Managers, and small finance advisory firms.
The Company aims to help disburse several thousand crores in the next few years. According to recent industry reports, there are 36 million SME units in India, with around 90% of them having no institutional finance. SMEs contribute about 8% to the GDP of the country, besides 45% to the total manufacturing output and 40% to the exports from the country. The majority of finance demand from these enterprises is in the form of debt, estimated at approximately INR 26 trillion ($520 billion).
The seed funding round also saw participation from Mr. William Campbell, former chairman of Visa International and former CEO of Citibank Global and Mr. Toos Daruvala, Co-CEO of MIO Partners, former Senior Partner and Board Member of McKinsey & Co. Parag Saxena, Co-founder of the $600m fund Vedanta Capital and CEO and Founding General Partner of the $1.4B fund New Silk Route is on the Board of Loan Frame.
The company is currently getting good traction from tier 1 and 2 cities pan India. It will be interesting to watch how Loan Frame makes its impact in the SME financing space.
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