Bengaluru-based fintech startup Billionloans Financial Services Pvt Ltd specialises in offering affordable financing options to small and medium businesses (SMBs) in working capital-intensive sectors such as FMCG, retail, kitchen utensil manufacturing, and apparel. It focuses on tier-I and II cities of Tamil Nadu, Karnataka, Andhra Pradesh and Telangana, besides the industrial hubs of Bengaluru and Chennai. The company connects enterprises with lenders by tapping into latest digital technologies.
It has now drawn up plans to disburse over 20,000 loans to SMBs, and has introduced an invoice discounting platform. The company’s founder-CEO Rangan Varadan speaks to SH about the new development, financing landscape, and more…
By Mrinmoy Bhattacharjee
What are the pressing issues and challenges faced by your SMB clients? How do you address these?
From a financing perspective, the lack of sufficient and timely credit continues to be the top challenge for SMBs. On top of that, the current GST challenges have increased working capital needs. We have developed specific products that help SMBs, both buyers and sellers, mitigate their working capital needs arising from the current GST issues. In the long term, I believe that Billionsloans, by delivering on its ‘Loans Made Simple’ promise, can help SMBs in getting quick and hassle-free access to working capital. We have recently introduced our invoice discounting platform for SMBs that are part of supply chains or distribution networks of large corporates. This new platform will enable them in getting working capital finance literally at the click of a button.
Explain your ‘Loans Made Simple’ marketing pitch.
We are guided by our mantra of ‘Loans Made Simple’ in everything we do. Currently, we are re-designing our application form to reduce the number of clicks required by the borrower. We are using methods like eKYC, real time data authentication, etc to improve turnaround time for applications. Borrowers can track the progress of their applications and loans including repayment status and dates. Similarly, the institutional lenders on our platform get credit assessed and KYC verified applications that they can process faster. So, by increasing digitisation and making use of the latest analytical techniques, besides user-friendly technology, we want to make loans simple, both for the borrower and the lender.
Our goal is to disrupt how borrowers are sourced and appraised using technology in the quickest possible manner. This will lead to a dramatic change in access, both for borrowers with thin credit histories as well as for lenders looking to expand beyond their traditional customer bases.
How are you different from your peers?
We are using technology to improve user experience. Our company is using digital and alternative data-enabled credit assessment to effectively measure risk and identify the appropriate interest rate for borrowers. We believe that our focus on credit and technology helps us to quickly evaluate borrowers and match them to lenders, thereby reducing application processing time. Our focus is to provide structured solutions for the supply chains and distribution networks of large corporates. This allows us to leverage our technology and data solutions at scale. We are integrating diverse data analytic techniques like psychometric analysis and big data, along with user experience-focused design to make all this happen.
What is your lending and borrowing mechanism? What are the minimum and maximum ticket sizes for lending and borrowing?
Borrowers can apply for a loan online. We have the option for contacting our field staff who can aid in form filling. This is for those borrowers who may not be comfortable filling in the online form on their own. Billionloans will then assess the application and evaluate its suitability for lending and, if found suitable, forward the application to the appropriate lender.
We liaise with the lender to ensure that all additional data, if any, is collected on the application. Loans are disbursed directly by the lender to the borrower. In case of invoice discounting facilities we offer a platform that brings together suppliers, buyers and lenders to finance the supply chain. While borrowers can be individuals or small businesses, only institutions are empanelled as lenders on our platform.
Typical loan sizes are between Rs 5 lakh and Rs1 crore for SMBs. Loan size depends on client needs.
How many SMBs do you want to reach? Which cities, and by when?
We plan to disburse more than 20,000 loans, directly and indirectly through our lenders, to SMBs in different locations in India in the next 2-3 years.
How are you ramping up your IT infrastructure to reach these geographies? Are you building your websites and mobile apps in multiple regional languages for the reach?
We are completely redesigning and increasing the capacity of our loan origination system to improve usability and speed. We have launched our invoice discounting system that will enable suppliers in all locations to avail working capital finance. We are not building websites and mobile apps in multiple regional languages for the reach at the moment; however, we will be using our psychometric testing tools in multiple languages like Hindi, Kannada and Tamil.