ClearTax to enter SME lending biz this fiscal, may tie up with banks, NBFCs

Company's business has come back to 70% of pre-Covid level now

Online tax filing platform ClearTax is looking at foraying into lending business with an aim of tapping the rising demand for loans among small and medium enterprises (SME), in the ongoing financial year, The Bengaluru-headquartered firm plans to work as a marketplace for originating loans for SMEs through partnership with lenders like banks and non-banking financial companies (NBFC).

“Through our association with the SMEs, we have realised that the access to credit for SMEs is low. Due to Covid, businesses are in need of credit. So, we have started a new division for this,” said Archit Gupta, founder and CEO at ClearTax. “We don’t have our NBFC licence, so we will be partnering with lenders for now.”

He said that there was a plan of entering into credit business before Covid, which got accelerated due to the pandemic. Owing to Covid-induced slowdown, the fintech firm has seen drop in tax filing (GST) volume in the first 60 days of lockdown period.

“Things are coming back to normal as many businesses are reopening. Our business has reached 70 per cent of pre-COVID level as of now and we are hopeful that things will be normal around September,” added Gupta.

The company, which has extended its work from home (WFH) option for its employees till September, said that it has gained market share in comparison to its competitors in the tax filing space.

“There has been a rapid growth from CA (chartered accountant) side (of the business), especially from areas like Gujarat and Maharashtra as these are the regions, which have been affected a lot. The number of CAs using this platform has also gone up,” said Gupta. He also said that many enterprises are migrating to cloud due to Covid, leading to addition of new clients.

In FY21, the company expects its growth to moderate marginally though it is hopeful of still logging a 75 per cent growth over previous fiscal. In FY20, the company expanded its revenue by around 100 per cent.

The company, which plans to be operationally break even in next 18 months, is also looking at increase its headcount in this fiscal. “We are 700 strong and will add people in our research and development division this year.”

Since its inception in 2011, ClearTax has raised $65 million in funding from investors including Silicon Valley-based Y Combinator, Scott Banister, Composite Capital, Sequoia Capital, SAIF Partners and PayPal co-founder Max Levchin among others. Gupta said, the company has enough funds to continue with the investments. “We don’t see any requirement of raising funds in the current year.”