Drip Capital builds awareness on Trade Finanace solutions on Kolkata exporters

Trade finance firm Drip Capital, with the Directorate General of Foreign Trade (DGFT), recently organized a seminar on the topic ‘Easy solutions for working capital needs’ at Hotel Middleton Chambers in Kolkata. The seminar, in association with the Chemicals Export Promotion Council (Chemexcil), the Plastics Export Promotion Council (Plexconcil) and the Indian Plastics Federation (IPF), was an awareness-raising program for exporters in the city.

The event saw the presence of Mr. Prasan Lohia, Regional Chairman, Plexconcil, Mr. S. G Bharadi, Executive Director, Chemexcil, Mr. Sisir Jalan, Hony. Secretary, IPF, Dr. Rahul Singh, Deputy Director General of Foreign Trade, and Mr. Nirmal Choudhury, Asst. Director (Mech), MSME – DI, with more than 75 small and medium enterprise exporters from the city.

SMEs account for 40% of India’s total export volumes but are some of the most underserved when it comes to working capital provisions. Demands for collateral, long processing times, heavy paperwork burden, and other such factors contribute towards making working capital highly inaccessible for SMEs. Institutions like factoring firms and NBFCs offer alternative financing solutions; however, many SME exporters are unaware of these offerings and need to be educated about the same. One of the easiest such alternative methods is invoice factoring.

At its most basic, invoice factoring is a process of procuring finance by selling the invoices of your transactions to a third party known as the factor. Based on your transaction history and other parameters, the factor gives the seller (the exporter) a credit line which they can then use to finance further transactions to other buyers (importers). In most cases, the seller gets 80% of their invoice value upfront from the factor (often without the need for collateral), and the remaining 20% -- minus the factor’s fees and interest -- after the buyer transfers the value of the invoice to the factor.

Kolkata is the commercial and financial hub of East and Northeast India. A major military and commercial port, the city saw exports worth US$6.4 billion in the current financial year alone (as of 9th December 2019). The city’s history of flexible production and a large informal labor sector have seen the development of several small businesses that deal with the manufacturing and trade of leather and leather goods, iron or steel articles, and various varieties of seafood.

Mr. Ranjan Dora, Director – Branding, Drip Capital said at the event, “There are several small and medium industrial units in and around Kolkata, which exported over 18,000 shipments worth US$486 million in FY2020 alone (as of December 2019). However, many of these SMEs face issues with managing their working capital due to lack of adequate financing options. To solve this problem, Drip Capital provides collateral-free post-shipment finance to Indian exporters with instant approvals and minimal documentation.”

Drip Capital has financed over $500 million worth of invoices till date, and currently works with over 400 exporters across various product categories and geographies across India and Mexico.

Drip Capital has undertaken a series of seminars, aimed at educating exporters about the great potential offered by invoice factoring and other trade finance services. The Kolkata seminar was the latest such endeavour and served to reinforce the potential of the solutions provided to exporters by Drip Capital.

Drip Capital’s plans include expanding into new markets across the world and leveraging technology to solve multiple problems commonly faced by exporters. Moving beyond trade finance, the company aims to continue leveraging data, technology, analytics, and a team of highly motivated professionals to become a leader in the global export ecosystem.

About Drip Capital: Drip Capital is a US-based trade finance company, providing collateral-free post-shipment finance to SME exporters with instant approvals and minimal documentation. The company was founded by Pushkar Mukewar and Neil Kothari with a philosophy to solve the working capital gap for SME exporters across emerging markets.