Credit and Finance for MSMEs: The interest rates will begin at 1 per cent per month with tenure up to 36 months based on the credit rating of borrowers. Currently, loans are available to 10,000 PayPal merchants.
India’s digital payments industry is expected to grow at a CAGR of 27 per cent during the FY20-25 period (Photo source: Reuters)
Credit and Finance for MSMEs: Digital payments company PayPal will now offer collateral-free business loans to Indian merchants who sell cross border using its services. The company will enable credit to MSMEs, women entrepreneurs, sole proprietors, and freelancers through the digital lending platform focused on small business FlexiLoans. The working capital loans from Rs 50,000 to Rs 1 crore would be offered to MSMEs and others for business expansion, purchasing stock, inventory, and other business-related expenditures. The interest rates will begin at 1 per cent per month with tenure up to 36 months based on the credit rating of borrowers. Currently, loans are available to 10,000 PayPal merchants.
“Economic activity across India has been deeply affected by the Coronavirus pandemic, and it is now when our MSME’s and freelancer community require solutions to kickstart business activity…Our partnership with FlexiLoans.com and combined expertise will enable us to reduce the existing gap in accessing credit while accelerating growth for cross border selling and fast-tracking the Vocal for Local and Digital India vision,” said Anupam Pahuja, Vice President – India, South East Asia, Middle East & Africa, PayPal in a statement. PayPal platform has supported more than 300 million consumers and merchants in more than 200 markets. The company had last year in December tied up with online payment gateway Razorpay to enable international payments for MSMEs and freelancers.
FlexiLoans, on the other hand, has partnerships with more than 100 businesses such as Flipkart, Amazon, PineLabs, MSwipe, etc., to offer credit to small businesses. “With our advanced Data science models and deep expertise in assessing millions of MSMEs with digital footprints, we are extremely excited to partner with PayPal,” said Abhishek Kothari, Co-Founder FlexiLoans.com. Over the last four years, the firm has disbursed unsecured loans worth over Rs 1,000 crore even as it gets more than 10,000 applications per month, largely from Tier III and Tier IV cities in India, and disburses around 50 crores every month. FlexiLoans has raised Rs 500 crore in equity and debt funding so far. It had last secured Rs 150 crore in equity and debt funding led by the Sanjay and Falguni Nayar Family Office. According to the company, it has seen 200 per cent growth in disbursals, 10X growth in customer acquisition, and 45 per cent repeat lending from the existing customer base.
India’s digital payments industry is expected to grow at a CAGR of 27 per cent during the FY20-25 period on the back of growth in retail electronic payment systems including National Electronic Fund Transfer (NEFT), mobile banking, and development of payment acceptance infrastructure. Digital payment transactions are likely to scale up from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, according to the India Trend Book Report 2021 by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young.