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Credit Fair is a consumer lending fintech startup that provides 0% or low-cost, short-term, unsecured installment loans at the point of sale. The startup's unique credit assessment process has helped it achieve a quick turnaround time (TAT) of less than a day and a high approval rate, enabling more Indians to avail credit. Apart from that, Credit Fair helps borrowers build a credit ladder, i.e. a credit score to help them access credit from other lenders and at a fairer rate. In just 3 years, Credit Fair managed to onboard over 1,000 merchants including upGrad, Toppr, Asian Paints among many. It has disbursed about $9 million to date with a loan book of $4 million currently.
Credit Fair - Company Highlights
- Startup Name-Credit Fair
- Founder-Aditya Damani
Credit Fair - About and Vision
Credit Fair provides 0% or low-cost, short-term, unsecured installment loans at the point of sale. The short-term vision of the company is to be the preferred lender in sectors of education, healthcare, home décor, and electric vehicles. Its long-term vision is to see every Indian have access to the right amount of credit at the right cost and at the right time.
By 2025, the startup aims to positively impact the financial lives of over 1million Indians. This vision reflects in its efforts to enable low-cost loans for ‘Bharat’ i.e. people who are not served by banks and large NBFCs. Over 70% of Credit Fair's loans are No Cost EMIs, hence offering better terms than even personal loans from banks.
Credit Fair - Industry Details
According to a report by BCG, the total value of digital lending is expected to be $1 trillion by 2023, driven by increased access to the internet and smartphones and increased digital purchases. As for the number of customers, 550 million people i,e, 46% of the population of India is currently underserved and makes up for the total addressable market.
Credit Fair has estimated the market opportunity in its target sectors - health, education, solar rooftop, and electric vehicles to be over $20 billion of which 25% is funded by EMI taking its immediate addressable market to $5bn. These sectors are fragmented but large and experiencing a high growth rate, making them attractive.
Credit Fair - Idea & Inspiration
The founder got the inspiration of starting a lending business in India while working at new to credit-focused lender, Oakam, and while advising private equity funds on setting up lending businesses. He saw people face issues rejections or delays in getting credit from financial institutions during critical life moments such as medical emergencies leading to reliance on informal channels that charge usurious interest of 10% per month and getting trapped in a debt cycle. This led to the idea of launching Credit Fair.
Credit Fair - Product/Service and USP
About 550 million Indians are underserved by traditional lenders because they are new to credit (NTC) or do not have a prime credit score
Availability of credit at the point of sale is currently enabled through credit cards, penetration of which is less than 4%
Borrowers in remote areas are also underserved by traditional banks due to the high costs associated with their onboarding, management, and recovery.
Hence, there is a huge demand for formal credit that can be availed thrugh simple processes.
On the other hand, merchants, who are majorly SMEs, struggle with providing a point of sale financing options to their customers resulting in loss of potential sales. Second, their operations are mostly based on cash transactions, leading to process inefficiencies and high transaction costs.
Credit Fair provides 0% or low-cost, short-term, unsecured installment loans at the point of sale. Its ticket size ranges from USD150-25,000 and tenure from 3 months to 3 years.
The startup's unique credit assessment process has helped it achieve a quick turnaround time (TAT) of less than a day and a high approval rate, enabling more Indians to avail credit. Second, by providing 0% or easy EMI, it is increasing access to low-cost credit hence, securing the financing health of the borrowers. Third, Credit Fair also helps borrowers build a credit ladder, i.e. a credit score to help them access credit from other lenders and at a fairer rate.
Credit Fair - Consumer App
As for merchants, Credit Fair’s products and high TAT and approval rate help improve conversions and ensure stable cash flows for the partners, hence, overcoming the issues of low sales and lack of working capital. Second, digitizing cash flows will help merchants manage their cash flows better leading to efficiencies in operations. Finally, it will further the startup's mission of financial inclusion as SMEs will be able to access credit and working capital loans, based on cash flows generated as a result of partnering with Credit Fair.
Credit Fair - Founders and Team
The founder, Aditya Damani, has a unique mix of fintech and institutional lending experience, having received a Banking Tech award while at new to credit-focused lender Oakam and TransferWise previously. He has also worked at PIMCO and advised private equity funds on setting up lending businesses.
Credit Fair - Founding Team
The team comprises over 50 members covering technology, credit, collections, sales, finance, and marketing functions. The team is young and shares a passion for the mission of the company as demonstrated through the values of ownership, curiosity, and obsession with customer satisfaction.
Credit Fair - Business Model & Revenue Model
Credit Fair follows a B2B2C business model. It is offering a win-win proposition to both merchants and customers by providing 0% or low-cost, short term, unsecured installment loans at the point of sale. The interest costs of these loans are borne by the merchants to attract new customers while the borrowers seek installment facilities to manage their finances. In addition, the borrowers bear a nominal processing fee and in some cases insurance fee as well.
Credit Fair - Startup Launch
It started with acquiring partners in the home décor sector through forming connections over LinkedIn and through cold calling. Because this sector was not actively served by big players such as Bajaj, the founders recognized an opportunity to develop expertise within the sector and provide products and processes suitable for customers within the home décor segment. That helped Credit Fair become the preferred lending partner in the home décor segment. Soon after they targeted the elective healthcare sector that also was vastly underserved by existing players.
The team focused on serving their partner merchants better than the competitors by providing better approval rates, faster turnaround time, and competitive pricing. That has been a key factor in retaining partners and capturing a bigger share of their wallets as well as getting recommendations from existing partners to form new partnerships.
Credit Fair - Challenges Faced
One major challenge that Aditya faced is - Aligning the different teams within the company to focus on the company goals while managing risk. He often observed that the different teams such as credit, operations, collections, etc. would have their team goals which often wouldn't add to the company’s growth or would be contradictory to the goals of other departments.
One tool, that has been very effective to achieve team-company alignment is setting OKRs. The founders set company OKRs (Objectives & key Results) and based on it, each team lead has developed team OKRs. This has helped them identify key metrics for individual teams that together contribute to the company’s growth. The OKRs are reviewed quarterly and have been effective to give direction to all team members.
Credit Fair - Advisors/Mentors
Credit Fair's board of advisors comprises of C-Suite from companies such as HDFC, IFC, PayU, and IBM.
Credit Fair - Competitors
Among large lenders, Bajaj Finance is its primary competitor. Among fintech lenders, Credit Fair's competitors include companies such as Liquiloans, EarlySalary, ZestMoney, and Eduvanz.
Credit Fair - Tools used to run startup
The startup uses Slack for team communications, OKRs for goal setting and tracking, Jira for sprint planning in addition to using third-party services for managing certain business operations.
Credit Fair - Current Growth & Future Plans
Credit has onboarded over 1,000 merchants including upGrad, Toppr, Indira IVF, Pristyn Care, Toothsi, Asian Paints, and Ampere.
It has disbursed about $9 million to date with a loan book of $4 million currently.
The startup's month-on-month growth rate is 15%.
Credit Fair was selected to be part of Village Capital’s Finance Forward: India 2020 cohort.
In the next two years, Credit Fair aims to establish partnerships with 5,000 merchants, reaching $15 million monthly disbursements. It is building its products to reach a $15M monthly disbursement rate and $75M Assets under management in 2 years. The funds will be used towards providing loss guarantee, expanding team, and marketing. It also plans to launch a P2P lending platform to further lower its cost of funding, hence keeping costs low for its customers.
Credit Fair - FAQs
What is Credit Fair?
Credit Fair is a fintech startup that provides 0% or low-cost, short-term, unsecured installment loans at the point of sale.
What is Credit Fair's Business Model?
Credit Fair follows a B2B2C business model. It is offering a win-win proposition to both merchants and customers by providing 0% or low-cost, short-term, unsecured installment loans at the point of sale.
How much funding has Credit Fair raised?
Credit Fair has raised total funding of $15mn (Equity + debt) from Anand Ladsariya and Alok Agarwal.
Is Credit Fair an Indian Company?
Yes. Credit Fair is an Indian company headquartered in Mumbai.