CredAble Report on SME Working Capital Challenges

In a bid to bolster the backbone of the Indian economy, CredAble, a leading fintech player in supply chain finance has announced the launch of a comprehensive report titled "Building Sustenance for SMEs: Navigating Working Capital." This report delves into the core challenges faced by SMEs in securing working capital and offers innovative solutions to navigate these obstacles effectively.

The SME sector forms the bedrock of India's economic landscape, contributing significantly to GDP, manufacturing, employment, and exports. Despite their immense contributions, SMEs grapple with a myriad of challenges, particularly in maintaining optimal working capital cycles, including delayed payments, financing constraints, and inefficient inventory management

The crux of the issue lies in the working capital scenario. Traditional lending models often fail to cater to the dynamic nature of SMEs, leaving them with limited access to credit and high-interest rates. A common parameter to assess working capital capabilities is the Cash Conversion Cycle (CCC), which for SMEs in India has grown to over 72 days, as per insights from the report.

The credit gap in the MSME sector, estimated to be close to ₹25 lakh crore, needs urgent attention. CredAble, recognizing the pressing need for innovative solutions, unveils a comprehensive approach aimed at bridging this divide.

"Our mission at CredAble is to empower SMEs by providing them with access to efficient financing solutions," said Mr. Nirav Choksi, CEO & Co-founder at CredAble. "Our report sheds light on the challenges faced by SMEs in managing their working capital and presents actionable solutions to foster growth and sustainability."

CredAble’s approach emphasizes cash-flow-backed lending, which moves beyond traditional asset-based collateral towards transaction-based credit services. By leveraging digital infrastructure such as the India Stack and partnering with key stakeholders, including the government and regulatory bodies, CredAble aims to digitize SMEs and broaden their access to financial services.

The report highlights two key financing strategies tailored to SMEs: SME-to-Corporate and SME-to-SME transactions. In SME-to-Corporate transactions, CredAble leverages existing relationships with large corporates to extend financing to SME vendors and distributors through Supply Chain Financing mechanisms. On the other hand, SME-to-SME transactions focus on leveraging data-driven insights to assess previously unbanked or underleveraged SMEs, thereby unlocking access to innovative financing structures.

"Our cash-flow centric approach and tech-backed underwriting process enable us to cater to the diverse needs of SMEs," added Mr. Choksi "Through partnerships, digital innovation, and a commitment to empowering SMEs, CredAble is paving the way for sustainable growth and development in India."

As India continues its journey towards economic prosperity, empowering SMEs becomes imperative for inclusive growth. CredAble’s report serves as a roadmap towards this goal, offering practical insights and actionable solutions to navigate the complexities of working capital management.