Instamojo disburses ₹110 crore in small loans to MSMEs within a year

Bengaluru: Instamojo Technologies Pvt. Ltd, a payment platform that caters to micro, small and medium enterprises (MSMEs), has disbursed around ₹110 crore worth of ‘sachet loans’ worth ₹10,000-12,000 to MSMEs, within 12 months after the launch of this service, according to a top company executive.

Instamojo initially launched as a payment gateway for MSMEs in 2012. It later branched into an e-commerce platform for merchants to list and sell their products and services online. It had also launched a lending product named MojoCapital and a last-mile logistics service branded as MojoXPress focused on its merchants in August last year.

“Our loan portfolio has been growing at a 15% month-on-month since the launch of our MojoCapital business last year. We provide short-term working capital loans with faster disbursals compared to traditional lenders to SMEs,” said Sampan Swain, chief executive of Instamojo in an interview.

He added that the company currently has over 900,000 merchants on its platform, out of which around 10% of them have used MojoCapital in the last one year. “We are targeting to get a million customers by the end of October. And we have added around 50,000 merchants in the last 45 days alone,” added Swain.

MSMEs usually depend on unorganized sources like self-help groups (SHGs), friends, families, to get quick working loans, however, once the quantum of sales and customers increase, small merchants start reaching to banks and NBFCs for large credit loans.

According to Swain most MSMEs avail small loans of up to ₹20,000 from Instamojo for keeping their inventory in tune with incoming demand—something that many SMEs struggle with. A merchant, who closes a sale of ₹10,000 to 20,000 via online means, will usually get the online settlement into their bank account within 3-4 days.

“However, if you are a small business, you need to have enough money in hand to buy the next set of inventory. Unlike large corporations, SMEs don’t have forecasting software to forecast sales and the inability to make inventory purchases upfront without sale orders in place is a challenge for small and medium merchants,” said Swain

Rather than waiting for the next big sale order, an MSME can take a quick working capital loan from MojoCpaital to the tune of its’ last order value and get it deposited instantly into their bank account. “Because we know that a particular merchant applying for a loan already has pending money to be received from their last sale via Instamojo, the credit scoring is done instantly from our records, and the recovery of the loan is made as soon as the pending payment comes in,” added Swain.

Instamojo is present in Tier 1 markets like Bangalore, Mumbai, New Delhi, and Chennai which tops the list of maximum loans issued while in Tier II, cities like Gurgaon, Ahmedabad, and Lucknow saw maximum loan disbursals, the company said in a statement.

Instamojo competes with names such as Aye Finance, Capital Float, Namaste Credit, and Lendingkart in the SME lending space, and those such as Razorpay, CCAvenue, CitrusPay, and PayUbiz in the B2B focused payment services space.