MSMEs are the backbone of India’s economy, contributing nearly 30% to the GDP and employing over 110 million people. Despite their crucial role, access to formal credit remains a persistent challenge, with several MSMEs unable to secure timely and affordable financing. Traditional lending systems often require extensive paperwork, collateral, and long processing times—barriers that prevent small businesses from growing and thriving.
Recognizing this gap, Harshvardhan Lunia founded Lendingkart in 2014 focusing on MSME financing. With a vision to make credit easily accessible, Lendingkart pioneered a completely digital, collateral-free lending platform, enabling small business owners to secure loans from anywhere in India with minimal documentation.
In an exclusive conversation with APAC Media and CXO News, Harshvardhan shares the milestones, challenges, and vision behind Lendingkart, highlighting how the startup is transforming MSME lending in India.
STARTUP SPOTLIGHT:
Inspiration Behind Lendingkart
Harshvardhan, who comes from a business family, got the inspiration to start Lendingkart while he was doing his MBA. During the course, he did a project on small businesses in the country and that was the first time he understood the challenges they face on a day-to-day basis, especially with regard to financial access. This understanding became even deeper when he started working in the banking sector.
Harshvardhan realised that one of the prominent issues faced by small businesses was the demand-supply gap in working capital.
“Imagine, if an SME business owner wants to get a loan to say expand his shop, he is required to shut his business for the day to go to the bank. Then, fill out endless paperwork. Run from one counter to another. And, most importantly, should have collateral to keep. I saw many many business owners facing this day in and day out. The time it took for the loan to come in was also very long. Those who didn’t go to the bank reached out to the middlemen and ended up with very high rates of interest.”
The foundation of Lendingkart was thus laid in 2014 with the vision to address the credit accessibility gap for MSMEs.
The most important gap to address was the digitization of the lending landscape so that small business owners could apply for loans from the comfort of their homes, shops, or factories. In the next step, the company pioneered a system to analyze multiple data points to determine the creditworthiness of businesses. These standards were developed for different segments within the sector: MSMEs without any collateral, with no paperwork, or those new to the credit system.
“We created a platform that would cater to businesses and make finance accessible and easy. It was (and is still) important to bring the SMEs into the financial ecosystem by formalizing credit. 10 years ago, digitization was not as huge as it is today, however, people were committed to some online procedures. And with this in mind, 10 years ago, we started Lendingkart.”
Today, Lendingkart has facilitated loans worth Rs. 20,000 crores across 14,500 pin codes in India.
“This is just the beginning. India is headed to become a $7 trillion economy by 2030 and at the backbone lies the MSME sector. We empower them, we empower the nation.”
Overcoming Early Challenges
Like any startup, Lendingkart encountered its fair share of hurdles. However, the company remained steadfast in its commitment to financial inclusion.
“Starting your own business comes with its crests and troughs. At different stages of building Lendingkart, we faced several kinds of challenges. There’s one thing however that I remember and to date verbalize it to my team which helped us sail through turbulent times – to always remember why we are in it. The larger purpose of our existence is financial inclusion for the MSMEs and every step of the way we have done our best to make the process of credit availability easy keeping the goal in mind.”
Funding and Growth Journey
Harshvardhan shares that the company has always looked at funding as a means to accelerate its growth and expansion.
“As a company, we are committed to frugal innovation ensuring that resource allocation is apt. In our funding journey, never have we done a round to inflate our valuation. All our investors have been strategic partners with us to achieve a single goal – to simplify finance for MSMEs. Our customers come first and we do what we do best for them.”
According to Harshvardhan, a recent investment by Fullerton Financial Holdings, a subsidiary of Temasek, is a testament to Lendingkart’s commitment to transforming MSME finance in India.
Differentiating Factors
Lendingkart stands apart from traditional lenders and fintech competitors through its singular focus on MSME business loans. With no physical branches, the company offers a completely digital loan application process that can be completed within minutes.
“All the players in the financial ecosystem are chasing the dream of financial access to one and all, and it is truly remarkable what each one has achieved so far. We have also been making various strides in this field for the past 10 years – Whether it was the continuous evolution of technology to simplify the loan process (from origination to disbursal) or hiring the right set of people for different functions to ensuring coherent data safety protocols to building a robust co-lending network. Since inception, we have been focused on a single product i.e. business loans for MSMEs. Business Loans Bole Toh Sirf Lendingkart. And every working minute, all we are trying to do is improve our product so that our offering can be availed by many. There are over 65mn MSMEs in the country, and till the last person has not been given credit access, our work remains undone.”
This streamlined approach, coupled with a robust co-lending network, has enabled Lendingkart to serve over 4,100 towns and cities, making it the fintech player with the largest geographical footprint in India.
Ensuring Financial Inclusion for Underserved Regions
The surge in internet penetration and smartphone adoption in India has been a game-changer for digital financial services. Lendingkart capitalized on this trend by offering collateral-free loans through its online platform and mobile app.
“Everybody owns a smartphone these days and as an after-effect of the pandemic, is open to performing activities online – be it banking, grocery shopping, buying beauty products, ordering food, payment, and more. There were hints of digitization back when we started Lendingkart. There exists a small business in every nook and corner of this country and the best way to reach out to them was going digital – that’s the first step of financial inclusion we took as a brand. We offer collateral-free business loans online – all digital, no physical branch. A business owner can apply for a loan online on our website, or our app sitting comfortably from his home, maybe sipping a cup of tea. It’s that simple. Our application process takes less than 5 minutes to complete!”
By leveraging cutting-edge technology, the company has simplified every stage of the lending process—from origination and underwriting to disbursement and collections. “Over the years, we have simplified the process of loan as well. Right from origination to disbursement to even collection, we ensure that our powerful tech stack helps in processing the customer better – be it underwriting, collecting bank statements, KYC processes, and more. We understood that the higher the ease of the product, the higher its acceptability. Since we have such advanced technology at our disposal, we can evaluate customers with minimal documentation or even with no paperwork, also with the ones new-to-credit, thus diversifying our reach.
Furthermore, to make its services accessible to a diverse customer base, Lendingkart offers loan applications in multiple regional languages.
“India is a diverse country and we speak several languages, and we wanted to ensure that anyone from any part of the country can apply. Therefore, we introduced loan applications in multiple languages as well. We, at Lendingkart, are dedicated to simplifying MSME finance and bridging the financial gap in the ecosystem.”
Key Milestones So Far
Since its inception, Lendingkart has achieved several significant milestones. From disbursing its first loan in Guwahati to surpassing Rs. 20,000 crores in loan disbursement, the journey has been marked by continuous innovation.
“In April 2014, we serviced our first-ever loan to a business owner in Guwahati, 2000 kms away from where we were. I remember all of us rejoicing at that moment. Since inception, we have disbursed loans to more than 250k MSMEs, and I take great pride in being a part of their journey. Every loan disbursed is every dream fulfilled.”
The company has also been recognized as the Best Fintech by industry leaders for three consecutive years. These milestones are not just numbers—they represent the tangible impact Lendingkart has had on India’s MSME ecosystem.
From a technology standpoint too, Lendingkart’s journey has been remarkable—evolving from its first-ever application to managing millions today, pioneering the adoption of Account Aggregator, and ultimately transforming into a comprehensive data warehouse. Each of these milestones has been a strategic step toward its current success.
What stands out most is the consistent industry recognition for its work, having been honored as the Best Fintech for nearly three consecutive years. For any entrepreneur, the goal is to build a sustainable business, and this organization has not only achieved that but continues to set new benchmarks in the fintech space.
Strategic Partnerships and Collaborations for Further Growth
Lendingkart’s growth has been fueled by strong partnerships with investors and financial institutions. The company’s first investment round with India Quotient was a defining moment, setting the stage for future expansion. Another key decision was establishing a robust co-lending framework with leading national banks and NBFCs.
“We started our co-lending platform in Nov’2020 and today we have more than 20 co-lending partners. In fact, 90% of our business is now co-lending.”
The company is now looking forward to its next phase of growth with Fullerton Financial Holdings.
Entrepreneurial Learnings
For Harshvardhan, the biggest lesson from his entrepreneurial journey has been the paramount importance of customer-centricity. Every decision, from product development to user experience, revolves around the needs of MSME customers. Even seemingly minor details, such as font choices on the website, are deliberated upon with meticulous care to ensure a seamless customer experience.
“My biggest learning is that the customer is the king. He is the CEO and he can make or break a company. We can work very hard in making products that ‘we’ think work best, but if it does not bring peace to the life of a consumer it is a failure. At Lendingkart, we take our product very very seriously, as I believe one should. Nothing is trivial when it comes to customer satisfaction. I have had meetings where there have passionate discussions on things like the fonts in our app or website, and while it may seem like a small thing, I feel very proud that we are paying attention to every single customer touchpoint to ensure a great customer experience. A happy customer makes a profitable company!”
Lendingkart’s journey is a testament to the power of innovation, perseverance, and a customer-first approach. By leveraging technology to simplify lending, the company has not only disrupted the traditional banking model but also empowered countless small businesses across India. As it gears up for its next phase of growth, Lendingkart remains steadfast in its mission—making finance accessible and effortless for MSMEs, thereby contributing to India’s overall economic growth
