Progcap, a fintech company specializing in supply chain finance and catering to micro, small and medium enterprises (MSMEs), has announced plans to digitize entire supply chains, by developing mobile applications user-friendly and other technology solutions to help small businesses manage their transactions. check credit limits and request disbursements on the go.
“We are building a complete ecosystem for MSMEs, helping them digitize their operations and become part of the formal economy,” said Pallavi Srivastava, co-founder of Progcap.
These efforts are part of a broader campaign for financial inclusion in India. The MSME sector accounts for around 30% of India’s GDP and 45% of exports, and is crucial for job creation and economic growth, she said.
Even though MSMEs account for 62% of employment in India, lack of access to formal credit has prevented many small businesses from reaching their full potential, she added.
The fintech which started operations in 2017, operates through co-lending partnerships with banks and NBFCs and leverages the lower cost of funds that banks can offer.
“Our co-lending model is beneficial for all parties. This allows us to expand our loan portfolio faster, provides our partners with low-risk access to MSME loans and ultimately allows us to serve more small businesses with better rates,” said Ms. Srivastava.
The company aims to be the essential link between banks and retailers, offering a comprehensive suite of digital solutions, she said.
“Our aim is to be India’s first digital SME bank, tackling not only the credit problem but also the overall business challenges faced by small businesses,” said Ms. Srivastava.
Progcap was established after recognizing the credit gap faced by small businesses in India.
“We have identified a staggering $530 billion credit gap for MSMEs in India,” she said, adding, “Traditional banks often struggle to serve this segment due to lack of track record of credit, appropriate documentation and guarantees. We saw an opportunity to close this gap.
To date, the company has disbursed nearly $3 billion in loans.
Through its Fast Turning Credit Line (FRCL), it provides flexible working capital to retailers and distributors. Unlike traditional loans with rigid repayment schedules, FRCL adapts to a company’s cash flow cycles, allowing for more flexible drawdown and repayment terms.
“Our FRCL product aligns with the unique needs of each business. It integrates with their inventory rotation and sales models, making it much easier for them to manage their finances,” Ms Srivastava said.
Published – November 7, 2024 at 3:38 p.m. IST