Serial entrepreneur Manish Khera is happy to provide short-term loans to unbanked micro-enterprises


Happy Loans offers paperless business loans as low as Rs 2,000 for as short a period as 30 days to consumers who do not have access to traditional banking services.

Start: happy loans

Founder: Manish Khera

When it was created: 2016

Where he is : New Delhi

Sector: fintech

The problem it solves: Creates tailored loans for small entrepreneurs and disburses them through a paperless process

Funding: Debt funded up to Rs 42 crore

Lokesh Shetty runs a family store in Jayanagar, Bengaluru; he buys products worth Rs 50,000 every month and resells them with a small profit. Unable to get any credit from distributors for his working capital needs, Lokesh often resorts to borrowing from informal sources. Then he has to deal with loan sharks who lend at 5% per month and literally blow his neck.

Like Lokesh, a majority of Indians do not have access to credit. India’s mom-and-pop store universe is 12 million, while the number of SMEs is pegged at 38 million. While formal banks only reach 40% of this universe, fintech entrepreneurs like Manish Khera are betting on this underserved consumer group.

Manish had previously invested in credit and digital financial services company Yatra Tatra Sarvatra, which was acquired by Airtel, and Manish served as CEO of the new entity – Airtel Money.

His new startup – Happy Loans – focuses on helping small businesses. Manish says his journey with Yatra Tatra Sarvatra — essentially the data he gleaned from it — led to the formation of Happy Loans when he discovered businesses needed loans as much as individuals.

While founding Happy Loans, Manish also created ArthImpact, a company that would provide loans to individuals. He realized that if he could serve individuals with paperless loan approval and disbursement, so could small business owners.

Happy Loans acquired a small NBFC which allowed it to start lending to businesses as it then had the required license.

Manish Khera, founder of Happy Loans

These people and their businesses had no choice but to turn to unstructured lenders, who offered very rigid terms and expensive products. Disrupting that with a personalized product and great customer experience was an opportunity I wanted to explore and Happy Loans was born,” says the 48-year-old founder of Happy Loans.

Happy Loans works with money transfer networks, merchant acquirers and other partners to offer instant short-term business loans to business owners.. The startup offers loans as small as Rs 2,000 and for periods as short as 30 days. People looking for loans can access the service from their phone and have options such as daily repayment and flexible term.

The beginning

Manish has been working in digital payments for two decades. It started with Fino Paytech, then moved to Yatra Tatra Sarvatra, which was later acquired by Airtel. His job was to study the problem of financial inclusion and the best way to solve it through the use of digital technologies, in particular the Internet and mobile phones. During this time, he realized that one of the biggest challenges for financial inclusion in India was the lack of access to traditional banking services..

“This segment is overlooked in part because mainstream companies find this sector difficult to access,” he says. Manish adds that Happy Loans decided to partner with other companies that were working to digitize the payments ecosystem in local markets with point-of-sale and banking channel networks.

Happy Loans partners include Mswipe, Eko, Storeking, Instant Pay, Jaldi Cash from Wiezzman Forex, Payworld from Sugal & Damani and Ongo.. These companies help acquire customers for Happy Loans.

Incidentally, the company launched just a month before demonetization in October 2016.

“We were excited about our country’s digital vision and began to focus on building our technology system. We developed an AI-based algorithm to assess the creditworthiness of potential customers,” says Manish.

Happy Loans partnered with Mswipe and Eko and disbursed its first loan in February 2017. In just over a year, it has disbursed over 14,000 loans to over 7,000 micro-enterprises and added eight more partners in its mission to reach every micro-enterprise in the country.

The startup has loaned over Rs 47 crore so far; 5,000 of these loans are worth Rs 22 crore. It claims to have a retention rate of 43%, which shows that many of its customers have already returned for credit in a short time. Happy Loans charges interest in the range of 13-20% per annum depending on a host of factors such as creditworthiness, length of loan and nature of the business.

To facilitate this, Manish raised over Rs 42 million in debt financing from three lenders, friends and family.

The business model

The evolution of the business model of Happy Loans has been based on the obstacles encountered by micro-enterprises. There were three obstacles to the free flow of credit that the company had to overcome when designing its business model.

  • Reach out to the customer and obtain data to assess creditworthiness. Happy Loans has achieved this through its network of merchant aggregator partners. It has live APIs that integrate with systems, allowing Happy Loans to access rich data on their merchant’s operations and finances.

The startup leveraged this data to assess credit score using unique proprietary tools based on AI and machine learning, taking into account more than 1,000 variables. This keeps his NPA very low. The company considers variables such as the nature of business, off-peak and peak seasons, region, weather, festivals, gender, age, number of family members, sales and behavior repayment of previous loans with Happy Loans (if applicable) to determine creditworthiness. This allows it to provide targeted, personalized and instant credit solutions.

  • The second barrier was convenience. For most of the micro-enterprises to which Happy Loans lends, the process of receiving credit from conventional banking and financial institutions was laborious and required a lot of documentation.

By leveraging partner data and using a robust digital platform, Happy Loans was able to deliver loans in real time. Small businesses find this instant credit convenient and useful. “We have also developed an application to facilitate access to our most dematerialized customers so that they can access our credit in a few clicks on their smartphone.says Manish.

  • The third obstacle was the credit terms. Micro-enterprises were often forced to take out loans on a case-by-case basis from local lenders. This led to onerous and punitive interest rates and abusive terms that suited the lender and not the micro-enterprise.

Happy Loans decided to rethink the credit it wanted to offer its customers. Instead of providing long-term loans for which interest accrues, it has decided to offer single short-term loans. It continues to innovate with a range of credit products and has added different types of loans such as weekend loans, 90 day loans, 30 day loans, overnight loans, etc.

The objective for the end of the next fiscal year is to disburse 150,000 cumulative loans to more than 100,000 micro-enterprises. The company’s strategy to achieve the kind of scale needed to achieve this goal requires 40 additional staff, bringing the number of channel partners to disburse the loans to 50.

Happy Loans competes with Capital Float, but says that in its segment, where entrepreneurs borrow Rs 35,000 for working capital, competition does not exist.

Mohandas Pai, Founder of Aarin Capital, says:Fintech requires scale and inclusiveness is what everyone is looking for. Hope the industry is able to scale with lower NPAs.”

Manish believes he can put a smile on the face of entrepreneurs trying to build their business. This is a happy loan for you!



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