BUISNESS & FINANCE
Marketplace Lending :
Unlocking Debt Finance for Renewable Energy
-By Simmi Sarin and Balawant Joshi
One of the biggest constraints growing businesses encounter is the lack of timely and adequate financing. Every project developer who has signed a PPA and is looking forward to get started on the project implementation knows the process that follows, once the equity tie-up is in place.
he finance team prepares a detailed project report and approaches 1-2 lenders that are nearby or the ones they know personally. The proposal goes through several rounds of back and forth for additional information requirements and queries and then, if you are lucky, you get a sanction in a few months. If not, the whole process starts again with another lender. Add to this the fact that renewable energy is a young industry and most companies donâ€™t have experienced finance teams in place, the funding delays often lead to lost projects. Marketplace lending (also known as peer-to-peer lending), a new innovation in the financial markets in India, is set to change that. The concept itself is not new; with marketplace lending
accounting for billions of dollars of loan disbursements in US, Europe and even developing nations like China. In the last ten years, leading marketplace lending players like Lending Club in US and CreditEase in China have created an important bridge between small borrowers and both institutional and individual lenders. Even lenders as significant as the UK government have chosen to lend to small businesses through a marketplace - Funding Circle, in the UKâ€™s case. The industry is taking its first steps in India, and early entrants like Loans4SME (www.loans4sme. com)are addressing a critical market need by connecting companies and projects that need funding with a wide range of lenders.
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