SME Lending Platform OfBusiness Secures $3.8 Mn Debt Funding From Kotak Mahindra Bank

Gurugram-based SME lending platform OfBusiness has secured $3.8 Mn (INR 25 Cr) in debt funding from Kotak Mahindra Bank.The funding comes as an extension to the $7.6 Mn (INR 50 Cr) working capital limit that the startup recently procured from the bank.

With the newly-raised debt funding from Kotak Mahindra, OfBusiness aims to further expand its reach across the country to encompass a larger number of asset-light MSMEs that are currently unbanked.

Commenting on the development, OfBusiness co-founder and CEO Asish Mohapatra said, “We aspire to be SME’s growth partner by adding value to the SME’s life beyond financing. When it comes to getting secured and unsecured credit or cost-effective raw material procurement, SMEs are fully dependent on informal channels and local distributors. With an NBFC license and right cost of capital through our debt lines, we are bundling innovative lending and procurement solutions to address growing needs of SMEs in the country.”

How OfBusiness Is Bringing SMEs Under The Umbrella Of Financial Inclusion

Founded in 2015 by Asish Mohapatra, Bhuvan Gupta, Chandranshu, Nitin Jain, Ruchi Kalra and Srinath Ramakkrushnan, OfBusiness is a technology-driven platform that couples lending with value added services as procurement and marketing. It serves as a single-window for SMEs to get secured and unsecured credit lines, which the SMEs can use for cost-effective procurement of raw material on the platform.

The platform also aggregates these raw materials, including metals, polymers, papers and electrical ancillaries, thereby passing a bulk of the aggregation benefits to the SME across 22 clusters. By providing ‘purchase financing’, OfBusiness guarantees end use of the credit lines. Additionally, the platform also helps SMEs to find new business opportunities through Tender information packets.

Underwriting of loans by OfBusiness is done by not only evaluating the financial data, but also several other alternate data sources of SME operations, which are contributed by the SME community of buyers and sellers.

At present, OfBusiness has built a strong base across key industries including manufacturing (auto, power, engineering, capital goods, solar) as well as infrastructure with monthly disbursals worth over $7.6 Mn (INR 50 Cr). It boasts an NPA of less than 1% and is looking to profitability by the next fiscal year.

Till date, the startup has raised funding in three rounds. Apart from the latest debt funding round from Kotak Mahindra, OfBusiness raised $5 Mn Series A investment from Matrix Partners India in February 2016.

Later in December last year, the startup secured another $11 Mn (INR 75 Cr) in a round led by Zodius Capital and Matrix Partners. The company counts Patni Group’s Apoorva Patni, Ola co-founder Bhavish Aggarwal, Quikr co-founder Pranay Chulet and Limeroad co-founder and CTO Prashant Malik as its investors.

Recent Fundings In The Indian SME Lending Space

As per a Nasscom report, the Indian fintech market is forecasted to touch $2.4 Bn by 2020, from the current $1.2 Bn. With banks and NBFCS servicing about $150 Bn of SME needs and unmet needs falling anywhere $20 Bn – $500 Bn, SME lending has emerged as one of the deepest non-penetrated verticals in India.

Other startups in this segment that compete with OfBusiness include Capital Float, Quikrupee, SMEcorner, Innoviti, Biz2credit, smehelpline and smegetmoney.

Recently, Delhi-based SME lending platform, ZipLoan, raised $3 Mn Series A funding from Matrix Partners India and others.

Earlier, in the month of September, Ahmedabad-based Lendingkart Technologies raised $10.9 Mn (INR 70 Cr) funding round, in the form of equity funds from Sistema Asia Fund, others. This followed an earlier $10 Mn (INR 67 Cr) debt funding round from YES Bank in August.

Backin August, Capital Float raised $45 Mn Series C funding, led by Silicon Valley-based Ribbit Capital and its existing investors SAIF Partners, Sequoia India and Creation Investments.

The latest $3.8 Mn debt funding from Kotak Mahindra Bank will enable OfBusiness to create a niche for itself by catering to asset-light SMEs that are struggling to procure loans from traditional banking institutions.

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