With increasing bird feed costs, a sudden fall in prices of poultry products, and rapidly decreasing sales, demonetisation in India hit Shri Venkateshwara Poultry Farms hard, in the form of a severe cash crunch. With a timely loan from NeoGrowth – the Mumbai-based non-banking financial company (NFBC) and digital lending platform – the business was able to survive its most challenging moments.
Today, Shri Venkateshwara Poultry Farms employs over 100 villagers of whom 75 are women. All employees are insured and rewarded with bonuses. Food, accommodation and education are taken care of. According to owner Samarasimha, he has banks knocking at his door offering business loans, but like every three out of four NeoGrowth customers, he chooses to stay with the company for the trust it showed in him when other lenders turned their backs.
Traditional underwriting methods used by Indian banks exclude a large proportion of small and medium enterprises who lack the basic documentation required by banks and formal lending sources. Lack of access to finance is one of the biggest constraints to growth for these businesses. As a result, 80% are currently self-financed.
NeoGrowth, established in 2013, is providing an alternative for many of these excluded organisations, and leading the charge towards more widespread financial inclusion. The company has pioneered a new category of lending for small and medium business owners based on analysing and underwriting digital payments data generated from daily sales. This approach revolutionises small business lending, making it possible for merchants to access a NeoGrowth loan. Flexible, small, daily automated repayments are one of the hallmarks of the business.
Today the company provides loans for 7000 small and mid-sized companies. Smaller enterprises constitute 99% of all companies in India presenting a vast opportunity for NeoGrowth to scale by delivering widespread financial inclusion in the form of loans.
The company’s business model benefits from the Indian government’s demonetisation initiative which has boosted adoption of digital payment methods. Data from the Reserve Bank of India indicates that the value of point-of-sale transactions made monthly rose substantially to INR740bn in September 2017, equating to an 85% increase year-on-year.
“India is at an inflexion point as the rise of cashless financial services, harnessing big data, transforming the lives of millions of emerging consumers,” said Michael Fernandes, Partner, LeapFrog Investments. “NeoGrowth is at the forefront of this transformation. By providing loans to underserved merchants against their future digital sales, it unlocks credit that is tailored to their business requirements, which in turn inspires growth and job creation.”
NeoGrowth ranked amongst the world’s Top 50 Emerging Market fintech firms by KPMG & H2 Ventures