U GRO Capital launches ‘GRO Micro’ for micro enterprises; aims to support 50,000 small businesses by FY22


Small business lending fintech platform, U GRO Capital, on Thursday announced the launch of ‘GRO Micro’, a distribution channel to aid lending services specifically for the unorganised micro businesses based in non-metro markets.

The company announced that it has expanded its distribution network by adding 25 branches across 5 states – Karnataka, Tamil Nadu, Gujarat, Telangana, and Rajasthan. It plans to reach out to 50,000 small businesses during the year.

The platform aims to offer small ticket loans – secured against property, as well as unsecured loans, to micro businesses to help them in stability in the post pandemic era, meet their working capital needs to fix broken cash flows as well as cater to their business expansion needs.

Shortlisting eight sectors and 38 sub-sectors based on an 18-month process, the sectors shortlisted include healthcare, education, chemicals, food processing/FMCG, hospitality, electrical equipment and components, auto components, light engineering and micro loans. Examples of borrowers would include businesses such as kirana stores, pharmacies, mess/ restaurants, hair salons etc.

Shachindra Nath, Executive Chairman and Managing Director of U GRO Capital said that the biggest need of MSME financing is at the bottom of the pyramid. Micro businesses, he said, are a part of their larger strategy. “If you go beyond or dig deeper into the published data, micro businesses have performed extremely well. And there is a reason behind it. When it comes to micro businesses, it is a small entrepreneur for whom this one business is prime. This is what survives his family. The only issue is the discipline – how much debt can be taken and how much can be serviced because, at times, small businesses over leverage themselves. A lender which has the ability to assess the capability of how much debt a small business can service will make this segment of the market strong,” he stated.

Based on its internal research, the firm found that there exists an opportunity to connect with over 5 million MSMEs in target markets, away from the urban centers. These small businesses in Tier 2 and 3 regions face a lack of formal capital infusion due to insufficient database and unavailability of requisite documents.

The aim is also to bridge the credit gap effectively, by providing its customised lending services to the MSMEs. Explaining the reasons behind the perennial problem of lending to small businesses, Nath added that this is not a segment of the market where all businesses are uniform. “The problem of lending institutions generally, especially banks, is that they try to underwrite customers on a predefined single criteria. It makes life very difficult because for a non-homogeneous sector, you cannot do underwriting on a homogeneous basis. Also, their cost to reach these customers is prohibitively expensive. So unless you start with a very digital focus to do business, it becomes difficult,” he said.

Elaborating on how he sees such issues to be solved, Nath highlighted that deep data specialisation in sectors and sub sectors to understand the customer will be key. “In addition to that, this can be solved with a broad-based distribution and by combining data analytics, digitisation and hybrid model of physical infrastructure and digital underwriting,” he added.

The key highlights of loans to be offered via GRO Micro include Rs 1L-15L (Secured) and 50K-5L (Unsecured); loan duration: 12 – 36 months (Unsecured) & 1 – 9 years (Secured); timeline for disbursal: 3-4 days (Unsecured); 7-8 days (Secured).

The process to avail the loan would entail a small business owner applying for a business loan assisted by a GRO Micro sales executive on its GRO+ App. The owner would provide conventional data like GST, ITR, bank statements/ passbook images as well as alternate data like trade bills, electricity bills etc. In-principle approval would be received post credit-appraisal within a day of loan application. Thereafter, loan agreement would be signed and loan is disbursed in the customer’s bank account.

The lending platform aims to expand their network by a further 75 branches by the end of FY 22. “Small business isn’t small. We want to do small business like a big business. Generally if you are servicing a small business, you have to be a small business yourself. And that’s why the sector gets neglected. In absolute terms, this is the largest segment of the credit need for India and there is definitely a need for a large institution to service this need. We would like to be one of them,” Nath asserted.


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