Madan, who runs a small furniture shop in Kirtinagar, New Delhi, applied for a bank loan of Rs 4 lakh. He was disappointed when the said loan was not granted by the bank. Then, he applied for one on IndiaLends, a credit underwriting and analytics platform for unsecured consumer lending.They gave him an unsecured loan of Rs 4 lakh,at an interest rate of 16 per cent.

SME financing has traditionally been limited to businesses that have solid financial credentials or assets to back the loan. However, a flock of startups, who are leveraging technology and alternate data sources to underwrite, are able to help less established businesses. Online lending is making it easier for SMEs and entrepreneurs to receive loans.