Small and Medium Enterprises (SMEs) have always faced issues with finances and because of lack of credit history, it is hard to get help from formal sectors like Bank. In addition to this, the complex processes of formal sectors make it harder for SMEs to benefit from them. This leads to them relying on informal sectors like moneylenders that charge them unbelievable interest rates (upto 80%). This keeps them in a constant loop of loan and debt making it harder for them to grow.
Loanzen, a logistics financing startup is helping such SMEs with credit. IIM-B Alumni, Madhu Sudhan and Venkatesh Sankarraman started Loazenn in 2015 as a peer-to-peer lending marketplace. They changed it to logistics financing startups for individuals or fleet owners in 2017. Anil S has been appointed as the CEO of the company while the co-founders have taken a back seat.
The startup focuses on 90 lakh small fleet owners which is two thirds of India’s logistics industry. The e-commerce industry has brought more attention to intra-state transportation but for this also fleet owner needs capital. To build the credit score, they take into consideration value of vehicle, kilometers travelled, demographic, load transported and repayment history.
Loanzen plans on including other essential services like inter-state license, tyres, repair etc. to fill the gap between supplier and revenue generation. Loanzen has served around 2500 beneficiaries in three years of its inception with giving out 200 loans a month. The average loan size is 4 lakhs with 1-5 years of repayment cycle. Their 70% customers come with no credit history and Loanzen helps them build one. They currently are planning on expansions and hope to have a business of 100 crore by end of 2020. By the end of 2021, they plan to be in at least 3-4 states. They have currently grown themselves in Karnataka with most of the market under them. The company has a lot of plans of expansions with new products like insurance for fleet owners in mind. Loanzen sure has figured out a good business plan and seems to get bigger in coming years.