Credit and finance for MSMEs: The funds will be deployed to provide business loans to MSMEs with a turnaround time of under seven days and also to expand Red Fort’s loan book.
Credit and finance for MSMEs: Investment grade non-banking financial company (NBFC) Red Fort Capital, which provides secured loans from Rs 1 crore to Rs 10 crore to MSMEs at 18-24 per cent interest rate, on Wednesday said it has recently secured Rs 11.5 crore debt fund to boost its small business loan portfolio. Rs 7.5 crore term loan was secured from asset financing company IKF Finance and Rs 4 crore from financial service provider Usha Financial Services.
The funds will be deployed to provide business loans to MSMEs with a turnaround time of under seven days and also to expand Red Fort’s loan book. The company aims to achieve an asset under management (AUM) of more than Rs 175 crore with the loan from IKF Finance by the end of the current financial year and plans to become a public company with $1 billion (around Rs 8,200 crore) AUM over the next five years.
Founded in 2005 by Parry Singh, Red Fort Capital, which has multiple financing vehicles, including its RBI-regulated NBFC in India, a globally focused principal investing group, and a private equity fund of over $1.3 billion, said it has zero non-performing assets (NPAs).
The NBFC offers credit to finance the purchase of equipment and machinery, working capital, and receivables to business owners, entrepreneurs, key managerial personnel (KMPs), and loan agents. It targets deals with growing cash flow and over 2x collateral cover between Rs 1 crore and Rs 10 crore.
The company accepts non-agricultural land, commercial and residential properties as collateral for loans with a tenure of up to 60 months. The processing fee is 2.5-3 per cent and the due diligence fee is 1.75 per cent of the loan amount.
Red Fort Capital Finance had raised a Rs 20-crore term loan sanctioned by public sector lender State Bank of India (SBI) in January this year for onward lending to MSMEs in manufacturing, logistics, FMCG, IT, textiles, education, etc.
Importantly, NBFC loans to MSMEs had increased by 14.6 per cent in FY22 with around more than Rs 1.75 lakh crore extended vis-a-vis 2.8 per cent growth with around Rs 1.55 lakh crore loans in FY21, according to the provisional data from the Reserve Bank of India (RBI), indicating disbursements under schemes such as the Emergency Credit Line Guarantee Scheme (ECLGS).
