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Instamojo plans to give loans to SMEs via its mobile app

Instamojo is a Bengaluru – based online lending startup which gives loans to SMEs. By the end of June 2017, Instamojo plans to add a ‘credit feature’ in its mobile app which will enable merchants to avail low – ticket loans between Rs. 10,000 to Rs. 80,000 instantly. Instamojo was founded in 2012 by Harshad Sharma, Sampad Swain and Akash Gehani. To avail the instant, low – ticket loan from Instamojo, merchants need only to have a smartphone with Instamojo’s mobile app installed in it and a bank account. Read more on Mobile Apps

Instamojo will deduct 25% of daily revenues post the disbursement of loans as EMI towards repayment of loans to ensure repayment of loans. Instamojo has so far raised funds amounting to US $2.6 million from investors such as Kalaari Capital, Blume Ventures, 500Startups and other angel investors. Instamojo is also planning to tie up with logistics companies such as Zeppo and eCourierz.com to provide merchants with the option of ‘home delivery of loans’ through courier.

“The services are in beta stage currently. We have tied up with various banks and NBFCs, as well as logistics companies. The structure will be the same. We will leverage the plethora of data we have on each merchant, which we will share with the partner companies, who will disburse loans in case of banks and delivery services, in the case of logistics”, Instamojo founder and CEO, Sampad Swain said.

Currently, Instamojo has 2,50,000 merchants who have downloaded its mobile app. The startup plans to increase that number to over one million by the end of 2017. This year (2017) so far, Instamojo has recorded over 2 million transactions worth over Rs. 600 crores through its mobile app. The startup plans to have over 10 million transactions worth more than Rs. 1600 crores by the end of 2018. More than 65% of the transactions recorded by Instamojo this year (2017) came from merchants who were living in Tier 2 or Tier 3 cities in India. The rest 35% are from the top 6 metropolitan cities in India.

Merchants can create a store on Instamojo’s website that allows them to catalog their products, generate invoices, organize a customer grievance solving process or choose from a host of marketing tools. Instamojo charges a 2% commission on each sale or payment collection. Instamojo saw a 50% rise in the number of merchants who availed loans via their mobile app post the demonetization move taken by PM Narendra Modi during November 2016.

“We add about 1,500 merchants on an average every day, the amount of transactions jumped by 50 percent during demonetization. That has become a base now”, Swain says.

Swain says that after the implementation of GST, the revenues of the startup have gone up significantly.

“With GST you have to be legit, there are no two ways about it. After its rolling out, those who are not already on the digital platform have adopted it. And we are at the forefront”, Swain said.

The startup has also tied up with tax consultants such as Cleartax, Vakilsearch.com, Legal Raasta and Profitbooks.com, to offer accounting services to its merchants, in the wake of GST being implemented. The revenues of the startup have been increasing year on year since 2012. Swain says that the startup is currently nearing profitability and will be profitable by the end of 2019.

Instamojo is definitely a useful and innovative startup. There are more than five million SMEs in India at present and the speedy disbursal of small – ticket loans that Instamojo provides is something that startups find very useful. They can get loans in a matter of a few minutes by operating a simple mobile app rather than having to stand in long queues at banks with a low probability of getting loans. It saves startups a lot of time and effort (and maybe even heartbreaks). The accounting services that Instamojo’s app provides in the wake of implementation of GST is also very useful for startups. The Government of India should fund and promote more useful and innovative startups like Instamojo. Read more on Startup News

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Instamojo plans to give loans to SMEs via its mobile app
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