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EarlySalary raises Rs 5 crore in debt funding

EarlySalary, an online company which offers salary advances and instant cash loans, has raised its first debt financing of Rs 5 crore from IFMR Capital. Earlier this year, the company had raised Series A equity funding to the tune of $4 million from IDG Ventures India and Dewan Housing Finance Corp (DHFL). The lending firm said that the debt infusion will be used as working capital. EarlySalary has its own non-banking financial company (NBFC) and lends from the NBFC’s books. It acquired an NBFC called Ashish Securities to get the required licence. It is common for NBFCs raise debt funding to replenish their loan books. It is interesting to note that IFMR Capital has also invested in EarlySalary's rival LoanMeet via debt funding. What it charges customers EarlySalary has already disbursed more than 7,000 loans last month and plans to reach a target of around 30,000+ loan disbursements per month by end of this financial year. The company charges Rs 9 per Rs 10,000 a customer borrows per day. Akshay Mehrotra, CEO of the company, said it typically customers repay loans within 7 days up to 30 days. So for a 30-day loan, a customer is charged an interest of Rs 270 on a principal of Rs 10,000. This translates to around 2.7% interest per month or around 30% per annum. Credit cards in India charge an interest in the range of 1.5% to 2.99%. But Mehrotra said that per annum interest calculation does not work for their business as they are looking to lend only for short…

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