They are filling the space left vacant by banks and helping small and medium units procure funds.
Small and medium enterprises (SMEs), which have traditionally faced problems in raising funds, now have several online portals – such as biz2credit.in, smehelpline.com and smegetmoney.com – to assist them in this task. These portals have come in to fill the space left vacant by banks and other financial institutions.
Ramit Arora, co-founder and president, Indian operations, Biz2credit.in, said: “There are around 26 million SMEs in India. There is a fragmented process of business lending for the SMEs. To fill in the information gap, we have created this portal. It has been a successful model in the US, so we brought it to India.”
The latest entrant to the business in India, biz2credit.in is a US-based online small business loan marketplace that was launched a few weeks ago in India. It offers free registration to SMEs. After registering and submitting a loan application, they can compare financing options and choose the most convenient one.
They also have a team of five people to assist with queries. The portal charges a percentage of the loan amount as its fee. It also has alliances with banks and financial institutions such as Saraswat Bank and Magma Financial Services.
Smehelpline.com is a corporate social responsibility initiative of Gyan Shree Industrial Consultants Private Ltd. All its services are free of cost for SMEs. It also has a grievance section that helps members of the portal to convey their grievances to the banks. It offers free tenders and listing with details of member companies and their products.
“For funding assistance to SMEs, we have tied up with some banks for an ‘on the spot credit camp’ to the SME sector,” said Mukesh Mohan, CEO, Gyan Shree Industrial Consultants. It was launched more than a year ago.
Launched in August, smegetmoney.com accepts requests from SMEs for funding. It has associated with banks, non-banking financial companies (NBFCs), private equity (PE) funds, venture capital funds and angel investors. Once an SME’s needs are understood, it is referred to the relevant source, and is charged a fee only after funding is arranged through one of these sources. A consultancy fee may be charged in case a project report or a business plan has to be prepared.
Pooja Kumar, CEO and founder of smegetmoney.com, said, “Our portal is focussed on the SME segment and offers a composite solution for all funding needs, including debt and equity.”
Though banks and their business correspondents perform offer similar services for their customers, especially SMEs, the portals believe that initiatives by banks are not enough. Mukesh Mohan said, “The number of officials in banks is not important. More important is the mind-set of bankers to help SMEs with timely and adequate financial assistance at affordable rates. We are submitting certain suggestions to the finance ministry and banks to be able to attain these objectives. One suggestion is to give the login/password to applicants to enable them to find out the status of their application online.”
Kumar of smegetmoney.com agreed, “When an SME approaches a bank, the latter may inform the SME only about the products which it offers and not about all possible options – which it may not offer but which its competitors may be offering. A neutral party is hence necessary who might be an intermediary who is aware of all products related to funding – secured loans, unsecured loans, foreign currency funding, trade finance and other similar things.”
She added that SMEs also need to be provided with a comparison of all possible products and costs associated with each, to enable them to take informed decisions, as it is not feasible for them to contact each bank and find out about their products and pricing.
Arora of biz2credit.in believes that business correspondents are only useful in smaller towns and rural areas, especially in issues like opening bank accounts. But, he said, the portal is also working with business correspondents to serve customers.
Mohan added, “Due to the lack of available information, most SMEs are not aware of the latest schemes available to them for financial assistance. Portals like ours can play an important role in sharing information and taking up their grievances with banks and financial institutions. We are also planning credit camps in major cities soon for SMEs.”
