Lendingkart Group includes Lendingkart Technologies Pvt. Ltd that has built the technology software for credit risk analysis, and an NBFC, Lendingkart Finance Ltd, that underwrites the loans. The funds from Yes Bank were raised by Lendingkart Finance Ltd.

“Large NBFCs are in similar business as us. For banks, they want to see a lot more cycles in your business. It is a gradual progression from NBFCs to banks. All large NBFCs anyway borrow from banks. It is a natural progression to move more and more towards banks. Certainly, NBFCs cannot lend below a certain rate because for themselves, the cost of fund is high,” Harshvardhan Lunia, co-founder and chief executive at Lendingkart, said in an interview.

Lendingkart had earlier raised an undisclosed amount in debt from DCB Bank Ltd and is in talks with other banks for more. The company has so far raised more than Rs250 crore in debt from the two banks and various NBFCs, including IFMR Capital Finance Pvt. Ltd, Hinduja Leyland Finance Ltd, Caspian Impact Investments Pvt. Ltd, Mannapuram Finance Ltd and Sundaram Finance Ltd.

Founded by Lunia and Mukul Sachan in 2014, the company lends to small and medium businesses. Lendkingkart has raised at least $30 million in equity from a clutch of investors such as Bertelsmann India Investment, Darrin Capital Management, Mayfield India, Saama Capital and India Quotient.

To be sure, Lendingkart lends from its own books instead of connecting borrowers with financial institutions. The company borrows from banks and NBFCs at a certain rate and lends them to small businesses at an interest of 16-24%. The company claims to have disbursed loans in about 650 cities to businesses across 23 segments including computers, mobile and accessories, fast-moving consumer goods, textile and industry supplies.

“The marketplace business (connecting banks or NBFC to borrowers) has scale limitations. Borrowers expect instant loans. But, if you don’t have your own NBFC, that expectation might not be met every time. The loans might or might not happen, or they may not happen in the timeframe required by the customer,” said Lunia.

“Since lending is our main business, money is working capital for us. We use the equity money for two things. One is build technology, analytics and infrastructure. Second, the equity gives our lenders a comfort that if anything goes wrong in the lending business, we have the appetite to absorb it,” Lunia added.

The average loan amount for Lendingkart stands at Rs4-4.5 lakh while less than 2% of the loans are non-performing assets.

The company competes with the likes of Capital Float (Zen Lefin Pvt. Ltd), Instakash Technlogies Pvt. Ltd, Neogrowth Credit Pvt. Ltd and IndiaLends (GC Web Ventures Pvt. Ltd), among others.

In May last year, Capital Float raised $25 million (Rs170 crore) in an investment round led by US-based Creation Investments. NeoGrowth so far raised about $43 million from a clutch of investors including Accion Frontier and Aspada while IndiaLends has mopped up about $5 million from DSG Consumer Partners and American Express Ventures among others.