In an exclusive interview to SME Times, Akshay Mehrotra, CEO and Co-founder of EarlySalary, said that most Indian MSMEs are unable to apply for and get loans due to the inability to meet collateral, asset, and paperwork obligation to secure short-term credit. He added that digital lending platforms have witnessed rapid growth especially post COVID-19 pandemic outbreak.

Excerpts of the interview…

Please tell our readers about EarlySalary and its entrepreneurial journey.

Akshay Mehrotra: The idea came when co-founders Mr. Akshay Mehrotra and Mr. Ashish Goyal were discussing the lack of easily accessible financial assistance for young professionals in the country in the year 2015. This is when they decided to go ahead with their thought of mind and step into the role of short-term financial solutions that have for far too long been fulfilled by turning to family and friends.

EarlySalary offers products that are easy financing solutions for the young aspirational middle-income Indians who could borrow on a mobile app changed; for the first time, someone could borrow in minutes without any physicality.

The three core principles that they follow even today are; the ability to borrow without justifying why, the ability to pay back anytime and only pay for the amounts and days borrowed, and a fully automated digital journey.

EarlySalary was started from scratch and by now has disbursed over Rs. 5,500 Cr since inception and grown the family to 450+ employees. The company has also witnessed a 6.1x growth in AUM since the Q1 of FY2021.

What are products and services do you offer? What is the competitive edge?

Akshay Mehrotra: The application sets up a credit line for the customers and gives access to them immediately after the user downloads it. The app provides options of instant cash loans, lines of credit and making payments using its RuPay card for interest-free EMIs.

Apart from lending on an app, they also provide millions of corporate employees access to salary advances and loans within employee portals. In addition, EarlySalary provides Buy Now Pay Later function across Education, HealthCare, Insurance or ecommerce merchants, giving an option to buy more products and build affordability.

EarlySalary works on a unique algorithm that combines traditional credit scoring with new social and online scoring technology-linked assessment concepts. The whole process merely takes seconds and provides loans instantly.

EarlySalary is a usually preferred option due to its speedy disbursal of loans and user-friendly interface. With less documentation, one can procure a salary of Rs. 15,000 or more every month. Loans from Rs. 5,000 to Rs. 5 Lakh is easily available with rates as low as Rs. 9 per day.

Please shed some light on the overall credit scenario in India.

Akshay Mehrotra: Digital lending platforms have witnessed rapid adoption of their offerings especially post COVID-19 pandemic outbreak. Industry reports show a projected growth of the digital lending market from $100 billion in 2019 to $350 billion in 2023.

Smartphone and internet penetration have turned customers to opt for digital avenues for any financial needs. Consumers falling under the new credit category includes millennials, Gen Z and salaried individual. As per a survey by financial firm Home Credit India titled ‘How India Borrows’ (HIB), nearly 40 percent of borrowers, led by millennials, showed the willingness to move to digital platforms for taking loans. The unsecured personal credit market is estimated to become Rs.9.2 trillion by 2025 as per the BCG report.

Do you think Indian MSMEs are getting enough access to institutional credit and at competitive price?

Akshay Mehrotra: Micro, Small and Medium Enterprises (MSMEs) are the core of India’s future growth and are expected to emerge as a $5-trillion economy by 2025. However, access to capital is a key challenge.

Most small businesses are unable to apply for and get loans due to the inability to meet collateral, asset, and paperwork obligation to secure short-term credit. Due to the unavailability of loans, they further are unable to build a credit history.

As borrowers have more information than lenders, it becomes a challenge for financial institutions to acquire information about the credit risk of the borrower. This absence of a mechanism to bridge the information can lead to failure in providing a loan efficiently.

The OCEN framework is opening a new wave and creating a common language for collaborating and partnership with lenders and digital platforms for aggregate data to help lenders lend to MSMEs.

What category of companies get benefit of EarlySalary services?

Akshay Mehrotra: EarlySalary provides solutions in every sector, be it Education, Healthcare, Insurance or Ecommerce. They provide quick loans, with the least interest, and no collateral. Approvals for the same are also instant thus saving time for the users.

With them, customers can enjoy a quick, paperless and trouble-free way to get personal loans and a one-stop solution during a financial emergency.

Please share your future plans with our readers.

Akshay Mehrotra: EarlySalary aims at building a larger organization and a financial model. With a sharp focus, they work towards growing a customer base and an AUM base. The development of new consumer focusing channels of Buy Now Pay Later is also essential for them, which will direct partnership with the employers and offer cards to our customer base.

They want to stand high in the customer’s minds, fulfill all their requirements in every way possible, and make product offerings that everyone can access from anywhere.