FlexiLoans, a digital lending platform for small businesses, has raised 375 crore rupees (US$45.2 million) in its series C funding round.

The round was led by existing investors Fundamentum, Accion Digital Transformation, Nuveen, and Maj Invest, with participation from British International Investment (BII), a UK-based development finance institution.

The funding includes primary equity for operational growth and secondary transactions for investor liquidity, the company announced on June 11, 2025.

The company plans to use the funds to expand operations, enhance product development, and strengthen its technology infrastructure.

Founded in 2016 by Deepak Jain, Ritesh Jain, and Manish Lunia, FlexiLoans offers financing solutions to Micro, Small, and Medium Enterprises (MSMEs) across India.

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🔗 Source: Your Story

🧠 Food for thought

1️⃣ FlexiLoans’ growth mirrors the expanding digital lending revolution in India

FlexiLoans has demonstrated remarkable growth since its founding in 2016, increasing its loan portfolio from approximately ₹500 crore in 2019 to over ₹10,000 crore today across 170,000+ loans1.

This trajectory reflects the broader digital lending expansion in India, where digital lenders collectively disbursed over ₹50,000 crores to SMEs in the last financial year alone—a 30% year-over-year increase2.

The company’s focus on technology has yielded significant efficiency gains, with its proprietary machine learning engine capable of analyzing 10,000 data points about a company in just 30 seconds, dramatically accelerating loan approvals compared to traditional banks’ 200-step manual processes1.

FlexiLoans has successfully maintained quality while scaling, with a reported bad loan ratio of less than 3% as of 2019, suggesting effective risk management through its advanced analytics approach1.

The company’s partnerships with major platforms like Flipkart, Amazon, Paytm, and PhonePe align with the industry trend of leveraging alternative data sources for credit assessment, a strategy that’s helping digital lenders better serve previously underbanked businesses.

2️⃣ Addressing India’s massive MSME credit gap remains a critical economic challenge

Despite FlexiLoans’ progress, it operates within a market facing an enormous financing shortfall, with reports estimating the MSME credit gap between ₹20-30 lakh crore (approximately $240-360 billion)34.

This gap persists despite MSMEs’ crucial economic role, with credit penetration for Indian MSMEs at just 14%—significantly lower than China (37%) and the United States (50%)3.

The financing challenges are particularly acute for specific segments: women entrepreneurs face a credit offtake of only 76% compared to 84% for men, while rural areas experience a higher credit gap (32%) than urban regions (20%)4.

A SIDBI study surveying 2,000 MSMEs across 19 sectors confirms that limited access to timely and adequate credit remains one of the sector’s most significant barriers to growth5.

Digital lenders like FlexiLoans, with their focus on underserved segments (66% of their loans going to Tier II, III, and smaller towns), represent an important part of the solution, though the scale of the challenge requires continued innovation and expansion from all financial sector participants.

3️⃣ Strategic investor backing signals confidence in specialized lending models

FlexiLoans’ ability to secure substantial funding (₹665 crore over just six months) during a period of general funding slowdown demonstrates investor confidence in specialized lending models targeting specific market segments2.

The participation of development finance institutions like British International Investment (BII) alongside returning investors highlights the dual commercial and social impact potential of expanding MSME financing in India5.

These investments appear well-timed as industry projections suggest digital lending will surpass traditional methods for unsecured loans by 2030, positioning early movers like FlexiLoans to capture significant market share in this transition26.

The company’s investment in proprietary technology—including applying for patents on algorithms and credit models—provides a competitive moat in an increasingly crowded digital lending landscape where intellectual property is becoming a key differentiator1.

FlexiLoans’ focus on the wholesale sector and other specific MSME segments demonstrates how specialized lending approaches can succeed by addressing the unique financing requirements of businesses that traditional banks have historically overlooked.

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