Ziploan partners with InCred to extend microloans to MSMEs

Ziploan has entered into a partnership with InCred with an aim to extend microloans (Rs 1 lakh – Rs 10 lakh) with tenure up to 36 months to MSMEs that are unable to access financial services from traditional banking players.

InCred and Ziploan entered into co-lending partnership to facilitate wider and deeper reach of institutional credit in the MSME segment by leveraging each other’s strengths in terms of size, scale and technology. Under the partnership, Ziploan will originate and process unsecured retail business loans as per jointly create credit parameters and eligibility. InCred will have 80% of the total loan on its books while the remainder will be on Ziploan’s books. Ziploan will manage the loan servicing through the loan life cycle.

Kshitij Puri, MD and CEO of Ziploan, said the partnership with InCred started at the beginning of the year 2021 and now the company is looking to scale it further. “We believe it will help us provide the necessary financing to the MSME segment, which has always been devoid of the same. The MSME segment is the backbone of the Indian economy, and for us to be a five trillion economy by 2025, ensuring growth of this sector is paramount.”

Saurabh Jhalaria, CEO (SME Business), InCred, said they believe in innovation-led partnerships and Fintechs remain core to solving the credit gap in India. “We are glad to see the partnership with Ziploan strengthening and helping us transform the credit accessibility for small businesses and working capital needs of India’s MSMEs.”

The MSME sector alone accounts for 40% of India’s GDP and has been providing employment to more than 12 crore individuals in the country. The MSMEs have been worst hit by COVID-19 whereby their balance sheets have been negatively impacted. The biggest challenge faced by this sector is the non-availability of sufficient funds. Many MSMEs also had to close down during the last several years due to working capital issues. In such a situation, provision of business loans to MSMEs is like an elixir of life for the sector. Through this partnership, InCred expands its presence in the MSME lending space and creates synergy with Ziploan’s technology and expertise in financing MSMEs over the last five years.

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Ziploan’s proprietary credit scoring algorithm ZipScore understands MSME businesses by analyzing their banking, repayment track record and financial discipline spread across over 40 key metrics. This allows the technology-driven NBFC to provide business loans in one of the quickest turnaround times in the industry while maintaining favorable unit economics. Ziploan’s partnership with InCred brings access to additional liquidity at competitive rates by partnering with a player of InCred’s size so as to be able to expand its reach. The integration of the entire process at both ends will ensure a seamless experience, right from applicant screening, document assessment and verification, business verification and disbursement process digitization.