SME lending platform Capital Float (Zen Lefin Pvt. Ltd) has raised $25 million Series B funding led by Creation Investments Capital Management LLC. Existing investors Sequoia Capital, SAIF Partners and Aspada Ventures also participated in the round, the company said in a statement on Thursday.

The new round of funding takes Capital Float’s total funding raised so far to $42 million in three rounds, which includes $13 million raised in February last year and $4 million seed round raised from Aspada and SAIF in August 2014.

The new round of funding will help it expand its footprint to over 20,000 SMEs in 100-plus cities, introduce new products and widen its capital sources on the platform, the firm said.

“Today, a customer can apply from anywhere through the web or smartphone, and have their creditworthiness analysed within minutes using sophisticated algorithms that draw on financial and alternative data. In many cases, we are able to approve and disburse a loan in less than an hour. This unique blend of tech and data is enabling us to scale rapidly while minimizing defaults and significantly lowering the cost of delivery for micro loans," co-founders Gaurav Hinduja and Sashank Rishyasringa said in a statement.

The development was first reported by The Economic Times on Thursday.

Financial technology, or fin-tech, start-ups in India have seen sporadic growth in funding activity since the beginning of last year. There are close to 1,000 fin-tech start-ups, which have raised around $1.2 billion in 2015 alone. Of this, mobile wallet provider Paytm (One97 Communications Pvt. Ltd) raised $890 million, according to data by start-up tracker Tracxn.

Capital Float, a non-banking financial company (NBFC) that started operations in 2013, provides working capital finance to under-served small businesses via its online platform and credit-underwriting platform.

The central bank in April this year initiated steps to regulate peer-to-peer lending platforms and register them as NBFCs. The move was aimed at bridging the gap in providing alternate credit to small borrowers.

Capital Float has seen good traction from online applications where it has partnerships with Snapdeal, Paytm and others to finance small merchants selling online. Other partnerships include Alibaba in business-to-business e-commerce, Uber in transportation, Pine Labs and mSwipe in payments, in travel, and others, the firm said.

Capital Float has so far lent 400 crore to small businesses in over 40 cities across the country.

“SME lending represents a very large, underserved, and growing market opportunity in India. By leveraging technology, Capital Float has built a differentiated model that is able to deliver credit to the smallest of businesses in a scalable and efficient manner. We are impressed with their execution and the scale they have achieved in a relatively short period of time," said Patrick Fisher, managing partner, Creation Investments.