Gurgaon-based OFB Tech Pvt. Ltd, which operates fin-tech platform OfBusiness, has secured Rs 25 crore ($3.8 million) in debt funding from Kotak Mahindra Bank, the company said.
The new round of funding is in addition to the $7.69 million that the company had raised from the bank earlier.
OfBusiness, which provides financing to small and medium enterprises, will use the money to expand its footprint, besides increasing its loan disbursal rate by reaching out to more small businesses in underserved regions.
“When it comes to getting secured and unsecured credit or cost-effective raw material procurement, SMEs are fully dependent on informal channels and local distributors. With an NBFC license and the right cost of capital through our debt lines, we are bundling innovative lending and procurement solutions to address the growing needs of SMEs in India,” said Asish Mohapatra, co-founder and CEO, OfBusiness.
OfBusiness was founded in 2015 by Mohapatra, Bhuvan Gupta, Ruchi Kalra, Srinath Ramakkrushnan, Nitin Jain, Chandranshu and Biswajit Mishra.
It offers a single-window platform to provide secured and unsecured credit to SMEs for procuring raw material. The loan amount is credited directly to the suppliers after the raw material reaches the borrowers.
The company extends credit of up to Rs 2 crore to SMEs having an average annual turnover of Rs 20 crore, at 18%, besides a 1% processing fee. Combined with discounted rates, it earns 24-25% on its loan offerings.
In a recent interaction with VCCircle, Mohapatra had said that the company disburses Rs 40-45 crore a month and was looking at 15% month-on-month growth. About half the loan book is accounted for by the auto and auto ancillary industry, followed by infrastructure services, capital goods and packaging.
The company aims to disburse about Rs 700 crore in 2017-18, compared with Rs 220 crore in the previous fiscal year. Since inception, it has disbursed Rs 400 crore, with Rs 110 crore in assets under management, and bad loans of less than 1%.
OfBusiness is also in the process of raising $25-30 million (Rs 160-195 crore), as part of its Series C round. It had raised Series A funding of $5 million in early 2016 from Matrix Partners and a host of angel investors. Last December, it had secured $11.1 million in a Series B round from Zodius Technology Opportunities Fund and existing investors.
A number of startups in the SME lending space have raised funding recently. In September, Lendingkart Technologies Pvt. Ltd, the technology and digital marketing arm of Ahmedabad- and Bengaluru-based fintech startup Lendingkart, had raised Rs 69.02 crore in a bridge round from Bertelsmann India, Mayfield Capital, Saama Capital, Darrin Capital ,India Quotient and new investor Sistema Asia Fund Pte.
In August, Lendingkart Finance, the company’s NBFC arm had raised $10 million in debt funding from a group of financial institutions, including Kotak Mahindra Bank and Aditya Birla Financial Services.
The same month saw Bengaluru-based digital lending platform Capital Float raising $45 million in a Series C round led by Silicon Valley-based fintech-focussed venture capital firm Ribbit Capital.