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DIGITAL CASH FLOW LENDING TO MSMES: CONCEPTS AND MODELS

Paper Number :WP45/2024
Publication Date :May 24, 2024


The transformative potential of cash flow-based lending (CFBL) in addressing the working capital needs of Micro, Small, and Medium Enterprises (MSMEs). The research paper investigates the concept and process of CFBL, emphasizing its importance for MSMEs in accessing timely financing solutions. It analyzes why the adoption of CFBL is crucial for MSMEs, considering their unique financial circumstances and challenges. Additionally, the paper examines various digital lending models tailored specifically to MSMEs, along with the intricacies of credit underwriting for digital lending platforms. It further explores the types of CFBL lending products available to MSMEs and delineates the procedural aspects involved in CFBL transactions. Through selected case studies, the paper highlights the role of software services in facilitating CFBL processes. Ultimately, it elucidates the essential elements of CFBL and outlines its integration into the digital landscape, offering valuable insights for policymakers, financial institutions, and MSMEs seeking to optimize financing strategies