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U GRO Capital and Kinara Capital announce co-origination partnership for MSME loans

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U GRO Capital and Kinara Capital announce co-origination partnership for MSME loans

MUMBAI: MSME lending platform U GRO Capital and fintech firm Kinara Capital, on Wednesday announced a strategic co-origination partnership to offer collateral-free business loans to small business entrepreneurs in India. Both companies plan to disburse Rs 100 crore by the end of FY2022 to MSMEs in Manufacturing, Trading and Services sectors.

The co-origination arrangement will leverage U GRO’s analytical data driven decisioning and integration through APIs with the smart technology platform of Kinara Capital. Kinara Capital aims to process loan applications of MSME entrepreneurs fast enough to disburse them in 24 hours.

“This partnership allows us to expand our footprint with U Gro by sharing both the balance sheet and the risk,” Hardika Shah, Founder and CEO, Kinara Capital told ET Digital.

The co-origination partnership is aimed at keeping the process seamless for the entrepreneurs. MSMEs will need to apply only once directly with Kinara Capital and can start the process online, by phone or in-person with a Kinara Representative. Once approved, the loan sanction documents will include the names of both U GRO Capital and Kinara Capital.

Shah explained that Kinara Capital will underwrite the customer based on certain filters agreed upon with U Gro and pass the information from their platform to U Gro’s when they accept the particular loan. Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital added that finding a customer, making this judgment call through their underwriting process whether the customer is lendable will be serviced by Kinara Capital. The company will provide support in vernacular and offer additional support such as a free digital workshop series with business tips for growth.

The collaboration is being made possible by U GRO Capital’s Gro X-stream platform, which is API-driven and a customizable technology platform for fintechs, payment platforms, NBFCs, neoBanks, and other digital platforms. Through this platform, U GRO coordinates MSME loans and also does Co-lending with banks and financial institutions. The company has signed 15+ co-origination partnerships with multiple partners.

Available financing for MSMEs will range from Rs 1 lakh to Rs 30 lakh with tenure ranging from 12-60 months. Financing can be availed for working capital, asset purchase directly from Kinara Capital and women-led businesses receive an automatic, upfront discount with the HerVikas program.

“I believe that the liquidity would be in the hands of the banks, but the underserved market will continue to be served by fintechs and new age NBFCs. We would like to create our own footprint and continue to use ourselves as a bridge support for this underserved market,” Nath said.

Talking about how digitization has changed the way lending works, Shah said, “We are currently in a unique time and space right now where there is so much digital infrastructure that we have built out as a nation from the regulators from the government.”

Adding here, Nath said that the inflection point will come when MSME financing is at the same level as that of consumer financing. He cited an example that if you want to buy a fridge in a grocery store, 7 out of 10 times you will get an on-tap credit only by paying a small amount and the fridge will be delivered to your home next few hours

“But, when an MSME gets an order to fulfill, it needs working capital for that and today, that can take anywhere from 15 days to 3 months. That is what is going to change dramatically,” he said.

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