Simplifying the Supply Chain Financing: CredAble

Every entrepreneur who experienced the taste of export or imports and multi-logistics in business have experienced the criticality of the supply chain. The subject of supply chain management is a business critical element for most entrepreneurs. And a substantial amount of investments involved in this. Now, meet CredAble – a startup which specialized in supply chain financing focusing on the needs of SMEs and MSMEs.

In an exclusive interaction with Faiz Askari of SMEStreet, Nirav Choksi, founder of CredAble explained trends and unique qualities of this venture. Here are the edited excerpts of the interview:

Faiz Askari | Tell us about the unique offerings that you are making in the supply chain industry, and give us some insight into the trends in the supply chain as an industry segment.

Nirav Choksi | Sure, so just to give a quick background, Ram Kewalramani and I set up CredAble in March of 2017. The vision for CredAble is that while there is a lot of innovation and growth happening in alternative lending to SMEs overall, specifically within the context of supply chain financing there was very little innovation and there were very few players addressing this space. Given both our backgrounds, this space became very interesting to build a platform that can be used to structure credit especially in the SME /MSME vendor space. So today one of our unique solutions is what we call “just in time” financing where we enable vendors of specific ecosystems like logistics etc. to be able to have access to working capital. The fundamental difference is that we are then able to lend significantly larger amounts of money between 2 and 20 crores to vendors who serve very creditworthy large corporates without the need for them to have any credit at all. What we enable SMEs to do is to use this money for their growth which no banks or any other financial institutions would be able to offer them.

Faiz Askari |  We get a lot of queries from start-ups related to funding. Do you focus only on supply chain or are you open to other agents as well?

Nirav Choksi |At the moment, our efforts on the lending side of the business are completely focused around supply chain and also within specific ecosystems like logistics and catering because we understand that space very well. We have been building technology around this and have disbursed over 150 crores to our customers in this space. The second part of the business is what we call the Dynamic Discounting and Receivables Xchange Platform. This platform is for post invoice financing where we work with very large corporates and enable their entire vendor base to have access to working capital. So we work with large corporates on one side and on the other side, we work with financial institutions like banks. The platform enables vendors of these large corporates to get very competitive funding against their receivables. In that context, if you are working with one of our corporate clients then we will be able to arrange unlimited financing against your receivables from them without you having to worry about collateral or security. So is it basically like money on tap available for SMEs and MSME vendors. 

Faiz Askari |  So what are the parameters that you follow for such lending?

Nirav Choksi |The only criteria for us to lend to companies is to understand who is their ultimate customer. So if they are working with large triple or double A companies or any company that has got a very strong credit rating, then against those receivables we are able to give them significant amounts of growth and working capital. Their credit score, their past history, their cash flow or their financials do not matter at all, the only thing that matters is who they are working for.

CredAble for Exporters 

Faiz Askari |Does this also cover exporters? For example, logistics is a major chunk of the overall spending for the garment industry domain. How do you look at that as a possibility for SMEs who may not be a logistics company but for who logistics is an important area?

Nirav Choksi |So for SMEs who work with logistics companies, we can enable financing by extending credit to them. So for example, if they have to pay a logistics company on day 15 or day 30, we could put together a product for them where we enable finance for that on day 15 and they could pay us back on day 90. So we can extend credit to them depending on whether the logistics company is willing to partner with us. So we can help SMEs and exporters gain access to very competitive capital for their vendors who are in the logistics ecosystem.

Faiz Askari | It has been a year since you have been operating so how many projects have you funded?

Nirav Choksi |Between both the businesses we have done close to about INR 150 crores of disbursement across ninety thousand plus unique transactions and across 16 thousand plus unique beneficiaries of those transactions.

Faiz Askari | There is a lot of focus from the government with regards to making lending a more accessible tool for SMEs and MSMEs. Do you get any support or incentive from the government because you are dealing with MSMEs which are a priority sector in India?

Nirav Choksi |Not yet, but we were selected as one of the 24 companies who won the Maharashtra Start-up Week recently, so the government of Maharashtra has given us a grant of INR 15 lakhs and them are committed to having our solutions implemented for several government agencies in the state. So, we are in the process of talking to several large government companies in Maharashtra to be able to implement our product to enable their vendors to get access to easy financing.

Faiz Askari | Where would you like to see CredAble in the next one year and what is your target in terms of disbursement?

Nirav Choksi |In the next 12 months we would be on our way to enable around 500 crores in total disbursement. But what we significantly would like to do is to grow our ecosystem of beneficiaries three folds from where we are currently. 

Faiz Askari | Would these 500 crores be utilized only on your present focus or are you looking to diversify?

Nirav Choksi |Largely, supply chain remains our focus and broadly covers vendors, distributors, dealers and companies who have receivables from large corporates. From an ecosystem standpoint, we will focus on logistics but we are constantly expanding that focus. So for example, we are working with a company who supplies office products to several large corporates and a company that supplies food-related supplies to several large FMCG companies. There are multiple ecosystems that we are trying to build and expand. So we are not restricted currently to any one ecosystem but as we grow we will expand this.