Drip Capital develops data-driven credit assessment tool for MSMEs
Drip Capital, one of the leading cross-border trade finance fintech, has developed a data-driven tool to ease credit accessibility enabling MSMEs to grow and compete globally.
The traditional credit assessment methods often relied on rigid criteria, such as personal guarantees, collateral and lengthy paperwork, which many small businesses could not meet.
Pushkar Mukewar, Co-founder and CEO, Drip Capital said by moving beyond traditional credit assessment models, the company has provided MSMEs access to working capital for competing globally and breaking down barriers that have held them back for far too long.
“We believe that technology and data have the power to change this,” he added.
According to the MSME Ministry, the SME finance sector is vital in global economic growth, especially in emerging markets such as India, where SMEs account for 45 per cent of the nation’s exports.
Non-traditional credit assessment tools powered by data and technology are changing the game for MSME exporters, unlocking doors that were once firmly closed, he added.
Non-traditional credit models assess creditworthiness using alternative data such as trade transaction history, insurance data and cash flow rather than relying solely on collateral or credit scores. AI and machine learning have enabled faster, more accurate decisions, providing MSMEs with flexible financing and thereby reducing trade barriers with faster, more flexible access to finance.
For instance, Drip Capital had extended finance to a textile exporter on its outstanding invoices. Quick access to capital allows cross-border trade businesses to scale its operations, hire more employees and eventually expand its customer base while keeping its cash flow healthy and its operations running smoothly, he said.
“As more fintech companies embrace these innovative tools, MSMEs worldwide will likely gain the financial support they need to thrive. This trend will bring greater inclusivity by financing a diverse range of businesses, including women-led enterprises and those in underserved regions,” he said.
As blockchain and other technologies emerge, they will further enhance the transparency, security, and speed of cross-border transactions.
For MSMEs, the rise of non-traditional credit assessment tools is emerging as an opportunity. By removing long-standing barriers to financing, these innovations are opening new pathways for growth, allowing small businesses to expand their reach and ultimately contribute more to the economy.