Bengaluru: Loans to logistics companies are going digital, with startups in the space looking to leverage data and technology to formalise credit to truckers, fleet owners and truck drivers. Startups such as Loanzen and BlackBuck are lending to driver owners, fleet operators and even first-time borrowers, to finance vehicles and also to fund purchases of spares.
“We are looking at ways to fund for replaceable parts like tyres; we are also offering a credit line through which drivers can buy fuel at designated fuel stations,” said Uttam Kumar Garodia, head of financial services at BlackBuck.
“We are processing these loans in partnership with other lenders, but have plans to apply for a licence ourselves, soon.”
As per industry estimates, the trucking industry alone in the country is around $100 billion in size, with only 30-40% of the space financed by the organised sector.
“We are trying to go after the segment which is financed by money lenders; these are mostly small vehicle owners trying to buy used trucks, and they form around 85% of the trucking industry,” said Madhu Sudhan, chief executive officer, Loanzen. Nearly every truck in the country is financed, but traditional organised lenders mostly finance new trucks.
There is huge demand for loans to buy used vehicles, and that is where Loanzen intends to position itself.
“We are offering loans in the ticket size of ₹1-10 lakh, with an average tenure of around two to three years; our customers own between one and five trucks,” said Madhu Sudhan. Loanzen has a loan book of ₹15 crore currently, with more than 500 customers. There is opportunity in lending for truck accessories as well.
These loans, or working capital, for truck owners keep vehicles in running condition, thereby helping generate more income.
“The EMI component for truck loans tends to be very large, therefore owners are always running tight in their cash flows. If we can lend to them to cover their running costs, we can help them smoothen their cash flows,” said Garodia of BlackBuck.
Bengaluru-based Porter, with a network of over 40,000 trucks, is planning to foray in this space next year. It intends to offer loans to driver partners even for personal requirements, like emergencies in the family, weddings, accident costs and others.
Pranav Goel, who cofounded Porter, told ET that if the platform could take care of the financing needs of its driver partners, they would generate more business and also show higher stickiness to the platform. Platforms like Blackbuck know the trucking business closely, as they generate demand through their platform.
“We have multiple data points on the trucks, we can assess their capabilities of generating income and have visibility on their cash flow, hence we are looking at designing innovative working capital solutions,” said Sudarshan Ravi, chief product officer, LetsTransport.
The Bengaluru-based truck marketplace has a supply of more than 40,000 trucks and caters to ecommerce, retail, FMCG and logistics companies.
The company has run a pilot with few lending partners, and plans to take the product live soon.
Digitisation is an important component of the sector, but unlike personal loans the need for physical verification and checks is extremely important, say industry executives.
“Our evaluation processes might be going digital, (but) we still have a strong physical network,” said Madhu Sudhan of Loanzen.