LoanTap, a digital lending platform, has raised 74 crore rupee (US$8.6 million) in a pre-series C round to expand its supply chain financing services for small retailers.

The funding includes 54 crore rupee (US$6.3 million) in equity led by July Ventures and 20 crore rupee (US$2.3 million) in venture debt.

Existing investors like 3one4 Capital, Avaana Capital, Kae Capital, and the Swapurna Family Office also participated.

The company focuses on India’s distributor-led small retailer ecosystem, especially in the grocery and pharmacy sectors.

Through LT Credit, it has financed over 4.5 lakh invoices worth more than 1,000 crore rupee (US$116.5 million) for 50,000+ retailers in the last two years.

🔗 Source: YourStory

🧠 Food for thought

1️⃣ India’s MSME financing represents a massive untapped opportunity

Despite contributing significantly to India’s economy, accounting for 8% of GDP, 45% of manufacturing output, and 40% of exports, MSMEs continue to face a severe financing gap 1.

This gap exists even though MSMEs represent over 90% of all firms globally and contribute approximately 70% of total employment and 50% of GDP 2.

The global MSME financing market was valued at $4.0 trillion in 2024 and is projected to reach $5.8 trillion by 2030, growing at a CAGR of 6.4%, highlighting substantial growth potential 3.

LoanTap’s focus on small retailers with average ticket sizes of Rs 8,000-15,000 directly addresses this underserved segment, positioning the company to capture a meaningful share of India’s digital lending market, which is projected to exceed INR 47.4 lakh crore by 2026 4.

This investment comes at a strategic time, as many traditional lenders have pulled back from MSME financing during the recent industry slowdown, creating an opportunity for specialized fintech players to gain market share.

2️⃣ Alternative data-driven credit assessment is transforming MSME lending

LoanTap’s proprietary BICRI credit assessment tool represents a broader industry shift toward using non-traditional data to evaluate previously “unbankable” small businesses 5.

The traditional lending model has struggled with MSMEs due to fragmented information and opaque credit assessment processes, forcing many small businesses to resort to self-financing 1.