How AI is transforming alternative capital access for SMEs and brands
expresscomputer.inPicture this: a bootstrapped D2C apparel founder in Ludhiana is doubling online orders every month yet her bank still wants property papers before it will fund raw-material purchases. She is not alone. India’s 63 million MSMEs contribute roughly 30% of GDP and create over 110 million jobs, but a ₹25 lakh-crore formal-credit gap keeps many in “growth-limbo”. Traditional underwriting asks for audited statements and collateral, documents that explain yesterday, not tomorrow.
Meanwhile, India’s digital rails are humming: 120 million UPI users, 80 million GST filers, and real-time APIs flowing from accounting, logistics, and e-commerce platforms. The missing piece isn’t liquidity; it is intelligence. Models that can read this data exhaust and price risk in real time. That is the promise of AI-driven debt models.
Why conventional lending falls short
| Legacy Criteria | The Blind Spots |
| Bureau score & tax returns | Ignores first-time borrowers, gig workers |
| Static balance-sheet ratios | Misses momentum, seasonality, digital traction |
| Collateral requirements | Excludes asset-light D2C and SaaS firms |
| Manual review cycles (30–90 days) | Capital arrives after the opportunity has passed |
As a result, India’s credit-to-GDP ratio languishes at ~58% – half that of the US or China.
How AI turns data into credit
AI-based underwriting ingests thousands of live signals – GST invoices, UPI flows, ad-spend ROAS, SKU-level margins – and maps them to probability-of-default in minutes. A SIDBI 2024 review found lenders using alternative-data models cut loan-processing time from weeks to <72 hours and reduced early delinquencies by ~25%.
Three engines power this ...
Copyright of this story solely belongs to expresscomputer.in . To see the full text click HERE