Companies like Capital Float, Lending Kart and Indifi Technologies that lend to small and medium enterprises are increasingly partnering with B2B e-commerce platforms such as Of Business and Tolexo to provide financing options to sellers and buyers on the marketplaces.

B2B e-commerce market 6 times larger than B2C: SME lenders The lenders say B2B e-commerce -where the transaction is between businesses, unlike in B2C where one party is the consumer – could become their strongest segment by 2017, as they estimate 25-30% of the profit to come from this space.

“This is a very crucial segment for lending companies,” said Gaurav Hinduja, cofounder of Capital Float.

“We can expect to see up to 20x growth in applications this year; we are expecting to receive up to 500 applications from buyers and sellers on a monthly basis.”

The loan size could range from a few thousand rupees to Rs 5 lakh for Capital Float. The company offers a paylater option to sellers and buyers, with it making upfront payments for the goods and collecting payments in 30-60 days. According to Hinduja, providing financing options to sellers on the B2B platform is different from the B2C space, where sellers are limited to retailers and wholesalers. “The B2B platform gives access to unorganised and diverse sectors from manufacturing, apparel and healthcare sellers, sourcing both raw materials and consumer durables. Many of them are traditional businesses entering the digital ecosystem,” he added.

Companies such as Indifi and LendingKart also expect B2B to see more trac tion than B2C.

“Working capital cycles for B2B are longer, they need higher financing and there are also buyers looking for credit options to purchase products. The loan ticket sizes of companies generating Rs 1-50 crore annual revenue could range from Rs 5-35 lakh,” said Alok Mittal, cofounder Indifi.

According to Mukul Sachan, cofounder of LendingKart, India’s B2B ecommerce market is six times larger than B2C and is expected to reach $700 billion by 2020.“There is massive untapped potential within this segment and that’s why we have closed several partnerships with players in this space,” he said.

B2B platforms view these partnerships as a positive sign as abundant credit options are likely to lead to a dramatic increase in their average order value.

SME lending companies offer interest rates of 15-19%.Through credit card , these are 24-36%.

Since it is the nascent stage of the partnerships, SME lending players could not comment on the default interest rate in the B2B e-commerce segment.

Source: The Economic Times