MSME finance – Growth and Innovation Trends (Case Studies)

MSMEs in emerging markets face persistent challenges in accessing formal credit, managing cash flow, and scaling operations. However, innovative financial solutions—from invoice financing, digital banking, to green lending—are bridging these gaps. This article presents a curated set of case studies highlighting the most impactful trends, innovations, and key players shaping the MSME finance landscape in India and across South and Southeast Asia.

1) Invoice-Based Financing: M1xchange (TReDS Platform)

Overview: M1xchange, a licensed TReDS (Trade Receivables Discounting System) platform, facilitates invoice discounting by connecting MSMEs with banks and NBFCs. It enables MSMEs to upload invoices, receive competitive bids from financiers, and gain immediate access to working capital.

How it works:

Invoice Submission: MSME uploads invoice to the TReDS portal.
Invoice Acceptance: Buyer approves the invoice.
Bid by Financiers: Multiple banks and NBFCs place discounting bids.
Bid Acceptance: MSME selects the best offer.
Funds Disbursed: Funds are released within 24 hours.
Payment Settlement: Buyer pays the financier post maturity (typically 45 days).

Impact & Metrics:

Over 60 lenders and 32,000+ MSMEs onboarded.
Discounted invoice value grew from INR 23,100 crore (FY23) to INR 43,000 crore (FY24).
Target for FY25: INR 70,000 crore in discounted invoices.

Investors: Mayfield Fund, Amazon, BEENEXT, SIDBI Venture Capital, Jindal Stainless.

Other TReDS Platforms: RXIL and Invoicemart (RBI licensed).

2) Supply Chain Financing: Ayekart

Overview: Ayekart offers a tech-enabled supply chain finance platform aimed at empowering traditional businesses through digitization and financial services. Ayekart’s B2B digital supply chain platform integrates financing, inventory management, and hyperlocal sales. The company also has expansion plans into Southeast Asia and Latin America.

Product Offering:

Ayekart B2B App: Connecting manufacturers, distributors, and suppliers.
Hisaab App: Store and distributor management tool.
Ayekart B2C App: Hyperlocal commerce for digital consumer engagement.

Impact and Metrics:

Enable 1 million+ businesses by 2026.
Expand platform-as-a-service (PaaS) model globally.

3) Digital Banking: Tide UK and Tide India

Overview: Tide offers digital business accounts and a suite of services designed for SMEs, helping manage financial operations, payments, and compliance.

Key Offerings:

Instant business accounts with low fees.
Expense cards, QR payments, and invoicing tools.
Loans up to ₹10 lakh ($12K) for working capital.
Future plans: Udyam registration, GST filing, and insurance.

Impact and Metrics:

1 in 10 UK SMEs use Tide.
Launched in India (2022) with backing from SBI, Tencent, and Apax Digital.

4) Digital Financing Platform: Funding Societies

Overview: Operating across Southeast Asia, Funding Societies is a digital lending platform offering financing to underserved SMEs through data-driven models.

Product Offering:

Term loans for working capital.
Trade finance against invoices/Purchase Orders (POs).
Microloans for micro-entrepreneurs.

Revenue Model: Origination and service fees, plus interest income.

Impact and Metrics:

Over US$4 billion disbursed since 2015.
100,000+ SMEs funded across Singapore, Malaysia, Indonesia, Thailand, and Vietnam.

Innovation Highlight:

Partnered with CGC Digital and FarmByte in Malaysia to finance agribusiness using farm-level data for credit assessment.

5) Green & Sustainable Finance: Ecofy

Overview: Ecofy supports MSMEs adopting green technologies, focusing on EVs, solar installations, and sustainable supply chain financing.

Product Mix:

EV Financing (2-wheelers: 41%, 3-wheelers: 19%)
Rooftop Solar (33%)
Term Loans and Supply Chain Finance (7%)

Impact and Metrics:

Disbursements started in Nov 2022. Loan book grew from INR 372 crore (Mar 2024) to INR 589 crore (Sep 2024).

Industry Outlook:

Southeast Asia requires US$200B annually in green investment till 2030 to meet climate goals.
Green Finance must scale rapidly to meet climate goals, requiring public-private partnerships and certification frameworks. Certifications assess MSME environmental, social, and/or governance standards, hence providing assurance to lenders that the MSME meets the minimum green and/or social standards.
Supportive Programs: IFC’s GB-TAP: Trained 1,000+ professionals from 280+ institutions, catalyzing US$7B+ in green bond issuances since 2018.

Conclusion: By leveraging digital infrastructure, data-driven lending, and sustainable finance, stakeholders can empower MSMEs to drive inclusive economic growth. With growing investor interest, government backing, and cross-border innovation, the MSME sector is poised for an inclusive financial revolution across India and the broader South and Southeast Asian regions.

Clarity Connect