Lendingkart Technologies, an online lending platform for micro, small and medium enterprises (MSMEs), is set to lay off 200 people or 30% of its workforce, citing the “tremendous impact” of the Covid-19 pandemic on the economy.
As part of the annual appraisal cycle, the Ahmedabad-based startup has undertaken the additional “right sizing” to account for the loss in business in the ongoing financial year, a company spokesperson told TechCircle on Tuesday.
Those affected will serve notice periods of up to five months, and be offered extended insurance and medical benefits, along with outplacement services.
Additionally, the company’s management and leadership team have taken pay cuts to compensate for the loss in revenue, the spokesperson said.
“This period (of Covid-19 outbreak) has had a debilitating effect on the MSME sector, where everything has come to a virtual standstill. Non-banking financial companies (NBFCs) have been significantly impacted, with loan disbursements coming to a halt and moratorium impacting collections,” the company spokesperson added.
The development comes days after the firm raised about $42 million in a growth funding round from returning investors Fullerton Financial Holdings, Bertelsmann India Investments, Sistema Asia Fund and India Quotient. The firm said it would use the fresh capital to expand its lending base, and for technological and analytical capability development. The company has raised over $139 million in equity capital so far.
Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, Lendingkart claims to have disbursed over one lakh loans to 89,000 MSMEs in 1,300 cities so far. It lends through its NBFC Lendingkart Finance, which uses big data analytics and machine learning to analyse the creditworthiness of client companies.
Earlier this month, the union finance ministry announced a slew of measures to help MSMEs expand their capacity and get listed on markets of choice. The centre will make an equity infusion worth about $6.6 million into MSMEs through a ‘fund of funds’ that will be operated through a mother fund and some daughter funds.
The government also announced term loans at concessional rate of interest for specific MSMEs. The loans will provide 20% working capital finance to these firms without guarantee and collaterals, with a tenure of four years and a moratorium of 12 months.
On Tuesday, Nitin Gadkari, union minister for MSMEs, said that the government was exploring new financial lending institutions to support small-scale units, including the strengthening of NBFCs, which can help small businesses avail easy credit.