Credit is the rocket fuel for growth of small retailers in India

Sunil Param : Head of Content and Communications at Pine Labs

By Sunil Param | January 29, 2020

Sunil Param is the Head of Content and Communications at Pine Labs.

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It a known fact that Small and Medium Enterprises (SMEs) are the backbone of the Indian economy. India has over 75 million SMEs and they are expected to grow to 105 mn by 2024. The contribution of SMBs to the Indian GDP is expected to grow from the current 40% to about 50% by 2024, as per a report by Zinnov titled "Digital SMBs - Key Pillar of India's Economy - 2019".The report states that SMEs will be a $80 billion opportunity by 2024.

The year 2020 will be transformational one for the SME industry with the launch of an e-marketplace and the increased focus on digitization. As financial inclusion makes inroads to smaller towns and cities, it is predicted that the next wave of growth in the SME space will come from eliminating the pain points of small retailers in India.

SMEs have their own set of challenges that act as roadblocks in the growth of their business. One of the biggest issues impacting the growth of SMEs is the timely availability of credit. Many a times, complex documentation process, lack of credit history, the mandatory requirement of pledging a collateral against loan are cited as reasons to deny credit to these merchants through the conventional lending mediums.

With the rise of new age fintech companies, the scenario has changed quite a bit!

Several alternative lending platforms are fast-emerging and offering loan products to SMEs to cater to their specific business requirements. Pine Labs is at the forefront of this revolution. We, along with our partners, are empowering our ecosystem of over 150,000 merchants to avail collateral-free loans. We have also managed to cut down the lengthy approval and disbursal process and hence, made it easier and faster for merchants to avail loans.

This is not all. At Pine Labs, we understand that no single product can find fitment with SMEs. Our products are designed to cater to specific merchant requirements. Also, we empower our merchants with the option of choosing a flexible repayment plan.

We believe that credit is the rocket fuel for growth of small retailers in India and here are a few reasons why:

Rise in digital payment acceptance

- The 2016 bank note demonetization was the catalyst for digital payment adoption in India. The young and tech-savvy shoppers in India are driving this adoption and there is an increased need now for small retailers in India to invest in upgrading their payment infrastructure to accept multiple modes of digital payments.

Competition from e-commerce

- Small retail businesses are facing the heat from the advent of e-commerce in India. The convenience of ordering online and exploring a wide range of products in a few clicks and taps is posing a real threat to offline retailers, especially the small retailers who have limited resources. If ever there was a need for them to add more capital to reinvent their business through a business loan, it is now.

Seasonal spikes in business

- The need for credit in retail is more during seasonal spikes in sales volumes and the festive of Diwali is one good example of it. A small retailer must be prepared to grow the business during such important occasions. Timely availability of credit to small retailers will help them grow their business.

Catering to bulk orders

- Quick disbursal of business loans can help small retailers meet any unexpected bulk orders that come their way. At Pine Labs, we have enabled credit for many such retailers who have used these funds to fulfill such bulk orders.

Store expansion

- Managing working capital in retail is a forever struggle for small retailers in India. Access to a quick collateral-free business loan can help retailers explore opportunities to enter new cities and add new stores to expand their business.

The Centre envisions a contribution of $2 trillion from micro, small and medium enterprises (MSMEs) as India eyes becoming a $5 trillion economy by 2024. However, one of the biggest challenges to this will be access to credit to SMEs. The new age fintech companies like Pine Labs can help solve this problem by offering relevant working capital loans to businesses via a simple and quick process that is finding relevance in increasing number of small businesses.