A time of the year approaches where approximately 312 million online shoppers are set to bolster the growth of India’s e-commerce, generating a staggering 3 lakh crore trade business in 2023. The festive season begets a major opportunity for India’s micro, small and medium enterprises (MSMEs), and brings with it several great complexities related to managing working capital and inventory.
Amidst surging demand for products and services during the festive season,
MSMEs
can often struggle to find the elbow room needed for capitalising on the potential to improve their cashflows. According to industry experts, an estimated 45% of such businesses need access to working capital during the festive season, a period characterised by requirements for additional inventory, labour and marketing.
Rajesh Shet, co-founder & CEO -
SahiBandhu
, India’s Largest Gold Loan Aggregator Platform said, “India's festive tapestry, we are dedicated partners to resilient MSMEs, offering gold loans with interest rates as low as 0.79% per month serving the immediate requirements that crop up in times of festive urgency for funds.”
Addressing this critical challenge for MSMEs, technology-enabled financial service companies are bolstering access to credit with
supply-chain financing
and other various tailor-made working capital products, reducing reliance on traditional lending channels, while providing businesses with greater financial autonomy and flexibility. The additional support provided by fintech lenders is critical in enabling these businesses to attain growth during a time when there is an uptick in sales and revenue.
CredRight, for instance, is a technology-enabled financial service company dedicated to empowering these businesses. Funded by Venture Catalysts and a consortium of angel investors,
CredRight
focuses on providing collateral-free and hassle-free working capital loans exclusively for micro and small businesses.
During the festive season’s three-month timeframe, consumer durable businesses generate almost half of their annual sales, while apparel businesses see up to 40% of their annual sales come in on an average. This year, the manufacturing industry and e-commerce sector are expected to generate the foremost demand for working capital. Owing to the significant surge in exports observed over the year, along with 31% of the 633 million Indian MSMEs engaged in the sector, manufacturing stands out for its working capital requirements.
“MSMEs have arrived at an interesting juncture with the convergence of digital technology and commerce, and the festive season could be an opportune moment for such businesses to achieve substantial growth and expansion. However, it is imperative to acknowledge the challenges faced by MSMEs during the seasonal surge in demand. At Aye Finance, we are committed to changing the way that micro and small businesses finance themselves, and have developed digital financial solutions to make access to credit quick, convenient, and hassle-free,” said Sanjay Sharma, MD and CEO of Aye Finance.
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