FinanceSMEs

MSME lender Red Fort Capital raises Rs 11.5 crore debt fund to boost small business portfolio

Credit and finance for MSMEs: The funds will be deployed to provide business loans to MSMEs with a turnaround time of under seven days and also to expand Red Fort’s loan book.

MSME lender Red Fort Capital raises Rs 11.5 crore debt fund to boost small business portfolio:

Red Fort Capital, an investment grade non-banking financial company (NBFC), has recently secured a debt fund of Rs 11.5 crore to strengthen its small business loan portfolio for micro, small, and medium enterprises (MSMEs). The company offers secured loans ranging from Rs 1 crore to Rs 10 crore with interest rates between 18-24%. This funding will enable Red Fort Capital to expand its loan book and enhance its ability to provide timely financial assistance to MSMEs.

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Out of the total debt fund, Red Fort Capital has secured a term loan of Rs 7.5 crore from IKF Finance, an asset financing company, and Rs 4 crore from Usha Financial Services, a financial service provider. These funds will be utilized to offer business loans to MSMEs, ensuring a quick turnaround time of under seven days. Red Fort Capital aims to streamline the loan disbursal process, enabling MSMEs to access funds swiftly and meet their working capital requirements.

The company’s strategic focus on expanding its loan book and boosting its asset under management (AUM) is evident from its target of achieving an AUM of over Rs 175 crore with the loan received from IKF Finance by the end of the current financial year. Red Fort Capital has ambitious plans to become a public company in the future, with an AUM of $1 billion (approximately Rs 8,200 crore) within the next five years.

The infusion of these funds will facilitate the growth of Red Fort Capital and its ability to serve a larger pool of MSMEs. By offering customized loan solutions and a simplified application process, Red Fort Capital aims to support the financial needs of MSMEs and contribute to their growth and development. The company recognizes the crucial role played by MSMEs in the Indian economy and is committed to providing them with timely access to credit.

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Red Fort Capital’s vision of becoming a public company with a substantial AUM reflects its long-term commitment to the financial sector and its confidence in the potential of MSMEs. By expanding its loan portfolio and embracing innovative financing strategies, Red Fort Capital aims to contribute to the overall growth and resilience of the MSME sector in India.

As the company continues its journey of providing financial assistance to MSMEs, it remains focused on maintaining a strong track record of customer satisfaction, ensuring transparency, and adhering to best practices in the lending industry. Red Fort Capital’s efforts to support MSMEs with their diverse financing needs will play a vital role in driving economic growth and creating employment opportunities across the country.

Red Fort Capital, established in 2005 by Parry Singh, operates as a comprehensive financial institution offering various financing solutions through its multiple financing vehicles. One of its key entities is a Reserve Bank of India (RBI)-regulated non-banking financial company (NBFC) based in India. Additionally, Red Fort Capital operates as a globally focused principal investing group and manages a private equity fund with assets exceeding $1.3 billion. Notably, the company prides itself on maintaining a zero non-performing assets (NPA) track record, reflecting its strong credit quality and diligent risk management practices.

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The NBFC arm of Red Fort Capital specializes in providing credit to support diverse business needs. It caters to a wide range of borrowers, including business owners, entrepreneurs, key managerial personnel (KMPs), and loan agents. The company offers financing options for equipment and machinery purchases, working capital requirements, and receivables financing. Red Fort Capital focuses on transactions with robust cash flows and collateral cover of more than twice the loan amount in the range of Rs 1 crore to Rs 10 crore.

To secure its loans, Red Fort Capital accepts various forms of collateral, including non-agricultural land, commercial properties, and residential properties. The tenure of these loans can extend up to 60 months, providing borrowers with flexible repayment terms. As with most financial institutions, Red Fort Capital charges a processing fee and a due diligence fee as a part of the loan origination process. The processing fee typically ranges from 2.5% to 3% of the loan amount, while the due diligence fee amounts to 1.75% of the loan amount.

Red Fort Capital’s comprehensive range of financing solutions, along with its emphasis on strong collateral cover and diligent risk assessment, positions it as a trusted partner for borrowers seeking credit in the specified loan range. The company’s zero NPA track record demonstrates its commitment to maintaining a healthy loan portfolio and managing risks effectively.

With its significant financial resources, global focus, and strong track record, Red Fort Capital continues to play a vital role in supporting businesses, entrepreneurs, and key personnel by providing access to tailored financing solutions. By offering competitive terms and efficient processing, the company contributes to the growth and success of its borrowers while maintaining its reputation as a reliable and responsible financial institution.

Red Fort Capital Finance successfully secured a term loan of Rs 20 crore from State Bank of India (SBI) in January of this year. The purpose of this loan was to support onward lending to micro, small, and medium enterprises (MSMEs) operating in various sectors such as manufacturing, logistics, FMCG, IT, textiles, education, and more. Red Fort Capital Finance plays a crucial role in facilitating credit access to these sectors, enabling the growth and development of MSMEs.

Notably, there has been a significant increase in NBFC loans extended to MSMEs in the fiscal year 2021-2022. According to provisional data from the Reserve Bank of India (RBI), there was a notable growth of 14.6% in NBFC loans to MSMEs, with an extension of over Rs 1.75 lakh crore. This indicates a positive trend compared to the previous fiscal year, where there was a 2.8% growth with around Rs 1.55 lakh crore loans extended to MSMEs. The increase in disbursements can be attributed to initiatives like the Emergency Credit Line Guarantee Scheme (ECLGS), which aimed to provide financial support to MSMEs during challenging times.

The rise in NBFC loans to MSMEs signifies the importance of these financial institutions in catering to the funding needs of small and medium-sized businesses. The availability of credit plays a crucial role in supporting the growth and sustainability of MSMEs, contributing to job creation, economic development, and overall business expansion. Red Fort Capital Finance’s collaboration with SBI highlights the efforts made by financial institutions to provide targeted financial solutions to MSMEs, thereby fostering their success and contributing to the overall economic growth of the country.

 

 

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