In a big step towards deepening its presence in India’s MSME ecosystem, digital lending platform LoanTap has closed its USD 6.2 million (~INR 74 crore) pre-Series C funding round to fuel its supply chain financing business. The round comprises INR 54 crore in equity and INR 20 crore in venture debt as investors bet big on fintech-led credit solutions for small retailers.
The equity portion of the funding was led by July Ventures, with continued participation from existing backers 3one4 Capital, Avaana Capital, Kae Capital, and the Swapurna Family Office, the latter being an early supporter of the company. The venture debt infusion is intended to provide LoanTap with additional flexibility to scale its operations efficiently.
Founded in 2016 by Satyam Kumar and the late Vikas Kumar, LoanTap has evolved from a consumer-focused online lending platform into a focused fintech lender addressing credit gaps in the underserved micro, small, and medium enterprise (MSME) segment. The company’s pivot has been reinforced by its proprietary credit assessment engine, BICRI (Business Indicator for Credit Ratings in India), designed to help lenders evaluate the creditworthiness of retailers who lack formal credit histories.
“India’s MSME sector is undergoing a massive transformation and we plan to use this momentum to double down on invoice financing – an area we see as a powerful enabler for MSME growth across India,” said Satyam Kumar, CEO and Co-founder of LoanTap.
Over the last 24 months, LoanTap has financed over 4.5 lakh invoices worth more than INR 1,000 crore, reaching over 50,000 retailers across 26 cities. The company now plans to expand to over 2 lakh retailers and finance one million invoices in the next 12 months with an average ticket size of INR 8,000 to INR 15,000.
LoanTap’s middleware technology platform, used by three financial institutions, also allows banks and NBFCs to efficiently originate and manage loans to small businesses. This tech-forward approach has enabled the company to reduce friction in credit access and promote inclusive financial growth.
The recent funding comes amid a broader slowdown in the fintech lending market. According to Fintech Association for Consumer Empowerment (FACE), Q3 FY25 saw a 15% drop in personal loan disbursements, the steepest quarterly decline since Q1 FY21. But fintech continues to be the most funded sector in 2024 with 162 deals worth USD 2.5 billion (~INR 21,422 crore), a testament to its resilience and long-term potential.
Despite the sector’s evolving dynamics, LoanTap appears well-positioned. The company ended FY24 with INR 67.5 crore in revenue, though it also reported a net loss of INR 12.7 crore. The leadership is now in the process of restructuring following the tragic passing of co-founder and CTO Vikas Kumar in April 2024, with plans to elevate an internal leader to the role of co-founder and appoint a new CTO.
The supply chain credit gap in India is estimated at a staggering INR 33.2 lakh crore, and LoanTap’s technology-driven, embedded finance approach is designed to address this shortfall. Its BICRI engine integrates with B2B e-commerce platforms, enabling distributors to set and scale credit limits for retailers, thus facilitating better inventory management and cash flow.
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A spokesperson for July Ventures noted, “We believe in backing scalable digital platforms that are category-defining. LoanTap’s sharp focus on technology-led, embedded credit for MSMEs aligns perfectly with our thesis. Their ability to combine deep retail ecosystem understanding with a data-led credit engine like BICRI positions them uniquely to fill the staggering MSME credit gap.”
LoanTap’s acquisition of Unofin, a healthcare-focused fintech, in March 2023 has also helped it enter medical financing – a diversification move that further strengthens its presence in essential service sectors like grocery, pharmacy and healthcare.
With this fresh capital, LoanTap is gearing up for the next phase of its journey – one anchored in embedded credit, data-driven decision making and a technology-first approach to democratizing access to finance for India’s most dynamic and underserved entrepreneurs.