We spoke to Rohan Angrish, CTO, Capital Float to understand how their online platform reduces the hassles associated with processing working capital requirements for SMEs in India.
1. Please tell us about your organization and how it plans to address financial needs of SMEs.
Capital Float is an online platform that provides working capital finance to SMEs in India. We offer flexible, short-term loans that can be used to purchase inventory, service new orders or optimize cash cycles. Borrowers can apply online in minutes, select desired repayment terms and receive funds in their bank accounts in 3 days with minimal hassle.
Our proprietary algorithms crunch over 2000 data variables while underwriting borrowers using both traditional and non-traditional data. The findings are then presented to a human interface, our credit underwriting team, who further assess the applicant. This multi-tier approach helps filter applicants, therefore identifying borrowers who are credible.
Capital Float has partnered with ecosystems across various verticals such as e-commerce (Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, Amazon, etc.), travel and hospitality (VIA and Yatra), retail (Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services) and taxi aggregators (UBER) etc. These partnerships help us widen our reach to SMEs in various segments and provide them with unique, customized working capital solutions.
We run a hybrid marketplace, wherein we co-lend with banks and other financial marketplaces. Capital Float contributes to at least 10% of the loan lent on the marketplace. The marketplace model helps us to combine our strengths with those of banks to better address the large credit gap in the market.
In FY 2016-17, we disbursed over Rs. 1,500 crores and served more than 7,000 customers. Banking on our robust product portfolio, we expect to disburse loans worth Rs. 5,000 crores and fund 20,000 customers in FY 2017-18.
2. Why should an SME approach for a loan requirement on your website? What’s in it for him?
Despite running healthy growing businesses, entrepreneurs in India consistently struggle to raise timely credit from banks. Those that succeed often have to pledge personal property to fund business needs. Restrictive lending policies, inflexible collateral requirements and slow disbursement times by formal financial institutions frequently push SMEs towards informal financiers; but while these lenders are quick to offer funds, crippling interest rates tie down the borrower to a chronic cycle of debt.
At Capital Float, we believe SMEs have three basic demands: simple access to credit, collateral-free terms and a trustworthy partner. Our mission is to bridge the current credit gap in the market with innovative and flexible credit products for SMEs, delivered in an efficient and customer-friendly manner. Borrowers can apply for a loan online through a desktop or a mobile device at any time, from anywhere. The entire application process takes no longer than 10-minutes. This ensures that the customer experience is high and the borrower need not spend hours in queues or make multiple visits to a physical facility. The collateral free loan combined with customized terms means that the borrower isn’t given a one-size-fits all loan product.
We offer the widest range of SME loan products in the market. For instance, we loan product for brick & mortar store retailers called ‘Merchant Cash Advance’ which is a loan against sales from card swipes. Similarly, we have a separate loan product for online sellers operating on eCommerce marketplaces. The team at Capital Float engages in regular product innovation to create working capital finance solutions that addresses the needs of SMEs from various segments.
3. What are the different types of loans you provide? This should include details regarding the maximum limit for the principal amount, rates of interest, loan tenure, etc?
Ø Pay Later: A collateral—free credit facility that allows the borrower to make multiple drawdowns within a credit limit. The borrower can make bullet repayments and reset the credit balance, making this a rolling loan facility. Interest is charged on the drawdown amounts and not on the entire credit limit. The unique product was created by Capital Float. We’ve partnered with several prominent companies in the travel segment for this product, such as VIA, Yatra&Goibibo and computer peripheral sellers such as Savex and Compuage.
Ø Kirana Loans – We collaborated with IndiaStack to offer micro loans to Kiranastore owners in India. These loans are disbursed in less than 90 seconds. These loans are completely paperless in nature and are digitally processed and disbursed to the borrower’s bank account. There is little to no human intervention, as even the underwriting is done by algorithms. We have partnered with the likes of PayTM, Payworld, Oxigen, ItzCash etc.to serve customers in the kirana segment. Watch this short video to know more about this product. https://www.youtube.com/watch?v=JML8qi-opRQ
Ø Online Seller Finance: The e-seller space is highly competitive and we understand the need for e-commerce sellers to be able to quickly replenish inventory, effectively manage logistics and tactfully handle customer expectations. Our partnerships with India’s biggest e-commerce platforms helps online sellers access fast and flexible working capital loans to operate optimally. Borrowers can opt for fortnightly repayments, preventing the burden of paying larger sums at the end of every month. We’ve partnered with Amazon, Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, etc.
Ø Taxi Finance – We offer among the lowest down-payment in the industry, helping cab drivers to own and drive their own taxi on taxi-aggregator platforms like Uber and Ola. These companies deduct the weekly installment from their driver’s earnings and transfer the amount to Capital Float, before remitting the earnings to the driver’s account. The weekly installments reduce the burden of heavy EMIs on the driver.
Ø Merchant Cash Advance: Businesses are actively using card payment machines to offer convenience to their customers. Apart from being integral to in-store sales, these devices can also help merchants acquire working capital to execute and expand business operations. Merchants can receive finance up to 200% of their monthly sales from card swipes. We’ve partnered with Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services, etc.
Ø Invoice Finance: Invoices can be liquidated into funds that can be used to fuel business operations. Borrowers can manage their payment commitments better with our invoice financing option. Our product converts invoices into money that can be immediately deployed to get their business going. Borrowers can opt for the one-time bullet repayment mode to suit their cash flows.
Ø Term Finance: This a typical, unsecured business loan and is relevant to B2B service providers, manufacturers and distributors. The loan tenure ranges between 6 months to 3 years, making it a relevant product for different types of businesses.
Merchant Cash Advance and Pay Later contribute to over 35% of the loan disbursals at Capital Float. We experience 550% increase in the disbursals of Taxi Finance last financial year. Our interest rates vary between 16-20 percent
4. How do you plan to expand your offerings in the near future?
We are currently serving customers in over 100 tier 1, tier 2 and tier 3 cities. This financial year, we will be increasing our reach to over 150 cities, without increasing headcount and feet-on-street.
We will also be targeting new SME segments by designing specific working capital solutions.
A special area of focus for us are micro-loans to traditionally underserved micro-entreprenuers. These include the likes of kiranastoreowners, taxi drivers, travel agents, etc.
5. What are the different technologies being used at Capital Float?
Our technology stack is not very different from what you might expect to see at any tech company, like Stripe or Netflix. When we hire, we focus on problem solving skills rather than specific programming or tech stack skills, believing that the latter can always be learned on the fly. To make sure developers and data scientists are productive from day one, everything talks to everything else over APIs, which lets us abstract specific implementation details, and to this end, we employ a micro services architecture.
We’re looking to scale on some other very innovative platforms like UPI, UIDAI, BHIM APIs, eKYC and eSign using Addhaar, biometrics using iris scanners, GSTN; basically on India Stack and everything associated with it. We rely heavily on white box as well a black box modelling, and are live with multiple machine-only processes within the company. It would take a while to enumerate all we do on the technology front, but hopefully, this list gives a little taste of what our outlook, attitude and appetite is for consuming as well as producing technology.