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Paytm expands collateral-free loans of up to Rs 500k to MSMEs

MUMBAI: Financial services platform Paytm on Monday announced expansion of collateral-free loans of up to Rs. 500,000 at a low-interest rate to MSMEs. In the last financial year, Paytm has processed loans worth Rs. 550 crore benefiting over a lakh merchant partner.

The company to offer collateral-free loans under the 'Merchant Lending Program' in Paytm for Business app. Its algorithm determines the credit-worthiness of the merchant based on his daily transactions and arrives at a pre-qualified loan offering. Paytm has digitised the entire process starting from the loan application, approval to disbursal with no additional documents required in partnership with NBFCs and banks. Loan repayment is primarily collected from the merchant’s daily settle.

Bhavesh Gupta, CEO - Paytm Lending said in a statement, “With our collateral-free instant loans, we are trying to help kirana stores & other small business owners who have been left behind by the traditional banking sector and do not have easy access to loans and credit. Going forward, we will especially focus on EDC merchants and provide higher loan amount based on their EDC transactions.”