The digital lending platform FlexiLoans, situated in Mumbai, has concluded its Series C investment round with the successful acquisition of Rs 290 crore. Global investors Accion, Fundamentum, and Nuveen—TIAA’s investment manager—along with current investor Maj Invest led the financing. This new funding represents a critical turning point in the company’s efforts to support India’s MSMEs, especially those in Tier 2 and Tier 3 cities where obtaining official credit is still difficult.
Credits: Outlook Business
Bridging the MSME Credit Gap
The foundation of the Indian economy, the MSME sector, considerably boosts GDP and employment. By the conclusion of the fiscal year 2023, an industry credit deficit of Rs 92 trillion is projected. Out of the 70 million MSMEs in the nation, less than 10% can obtain government loans. By offering quick and easy financing choices to small businesses, FlexiLoans seeks to close this gap. Due to their lack of collateral and established credit records, these businesses are usually not eligible for traditional loan procedures.
The MSMEs-focused financing platform FlexiLoans was founded in 2016 by Manish Lunia, Ritesh Jain, and Deepak Jain. It offers supply chain finance and working capital loans with limits ranging from Rs 2 lakh to Rs 25 lakh.
Through its in-house NBFC (Non-Banking Financial Company), Epimoney Private Limited, and partnerships with over 20 other lenders, FlexiLoans has already disbursed more than 1 lakh loans worth Rs 7,000 crore across 1,500 cities.
Credits: The Economic Times
Expansion Plans and Technological Infrastructure
FlexiLoans intends to increase its product offerings, grow its operations, and make significant investments in its technology infrastructure with the Rs 290 crore in Series C funding that it has obtained. The company’s totally digital, branchless business style is one of its main advantages. MSMEs in remote places can more easily access financing because the entire loan origination and distribution procedure is done online.
According to Deepak Jain, co-founder of FlexiLoans, “we aim to reach a loan book of Rs 5,000 crore by combining supply chain finance and term loans.” Furthermore, the company plans to continue focusing on MSMEs in Tier 2 and Tier 3 cities, which now make up 70% of its loan portfolio. These underdeveloped sectors provide tremendous growth potential, particularly for industries like FMCG, consumer electronics, pharmacy, and fashion that account for 60–70% of FlexiLoans’ income.
Assets under management (AUM) for the company increased significantly, from Rs 1,067 crore in March 2023 to Rs 1,817 crore in June 2024. This quick growth demonstrates both the efficacy of FlexiLoans’ strategy and the robust demand for credit in the MSME sector.
Impact on MSMEs in Underserved Markets
A significant portion of FlexiLoans’ customer base—54 percent of borrowers—are first-time business loan customers. The company’s focus on underserved markets, especially in Tier 2 and Tier 3 cities, has altered the playing field for small traders, wholesalers, sole proprietors, and retailers. Since traditional banks usually require official credit scores and collateral, these businesses generally struggle to get loans from them.
By utilizing cutting-edge technology to evaluate creditworthiness through alternative data sources, FlexiLoans is able to provide services to firms that are generally not included in the official banking system. The organization may more efficiently target MSMEs by collaborating with digital platforms like Amazon, Flipkart, Paytm, and PhonePe, as well as financial aggregators like Paisabazaar.
Investor Confidence in the Fintech NBFC Sector
The Series C fundraising round shows that investors are becoming more confident in the fintech (non-banking financial company) space, especially in businesses that help MSMEs with their financial needs. The 60 million small enterprises in India have enormous potential, but many of them are in dire need of working money, as highlighted by Radhika Shroff, Managing Director of Impact Investing Private Equity at Nuveen. FlexiLoans provides a scalable answer to this need with its unique digital distribution strategy.
Fundamentum Principal Mayank Kachhwaha commended the business for its excellent execution and emphasis on profitable expansion. FlexiLoans began to earn a profit in FY23, and the company’s growth trajectory is demonstrated by the Rs 3,000 crore in loans disbursed in FY24 alone.
