This Lender Is Bringing Business Loans to Smaller Cities
For much of his career, Pankaj Poddar’s professional life revolved around identifying what could go wrong with a loan. Over nearly two decades, he worked in credit and risk roles across Kotak Mahindra Bank, Standard Chartered Bank, Bajaj Finance, and SBFC Finance, examining lending through the lenses of underwriting quality, portfolio health, operating costs, and profitability.
Yet the long-term goal was always entrepreneurship. Poddar is now Founder, Managing Director, and CEO of Business Nextgen Finance Private Limited (BNF), a young non-banking financial company focused on secured lending to small entrepreneurs, particularly outside India’s largest financial centres. That ambition has received a major boost with a Rs 215 crore equity raise.
Rs 215 Crore Equity Infusion
BNF has raised Rs 215 crore from a mix of institutional and strategic investors as it prepares to scale its MSME lending business. The round was led by Beams Fintech Fund I and its affiliates, alongside Baring Private Equity India Fund 6, Saison Capital, UNLEASH 1st Investment Partnership, and other investors.
The transaction received prior approval from the Reserve Bank of India. Following the deal, Beams and its affiliates will collectively hold more than 26% of BNF’s paid-up equity share capital on a fully diluted basis. The capital will be used to expand the secured lending book, widen geographic reach, and invest further in technology.
For a lender that received its RBI Certificate of Registration only in September 2025, the fundraise provides meaningful firepower to test a thesis Poddar developed over years of studying small-business credit: a substantial lending opportunity remains untapped beyond India’s top 100 markets.
Sagar Agarwal, Partner at Beams, notes that the significant credit gap in India’s underserved MSME segment offers a compelling opportunity for a differentiated lender with strong underwriting, technology, and customer-centricity.
Looking Beyond the Top 100 Markets
According to Poddar, roughly 70% of secured MSME and mortgage credit is concentrated in India’s top 100 geographies. BNF aims to operate beyond them. Its longer-term ambition is to build presence across as many as 1,000 locations, with a focus on smaller cities and towns where entrepreneurs may run viable businesses and own assets but do not always fit conventional underwriting templates.
BNF planned a pan-India model from the start, with both its North and South zones going live from day one. Many of the businesses it targets lack conventional documentary proof of income. Property records are not uniformly digitised. Collateral assessment can be more complex outside major cities. Determining repayment capacity often requires looking beyond tax returns.
BNF’s loans typically range from Rs 5 lakh to Rs 30 lakh, with an average ticket size of around Rs 10-12 lakh. Current average interest rates stand at about 17-18%. Underwriting centres on the borrower’s ability to generate cash rather than solely on the value of the pledged property. Credit officers examine the underlying business, stock levels, banking activity, existing obligations, and other available information. Bureau data and alternative sources supplement the assessment, while field-level checks help evaluate both the entrepreneur and the collateral.
The goal is to estimate cash flow available after existing obligations and then apply a buffer for servicing the new loan. Collateral serves as protection if things go wrong; it is not meant to replace the borrower’s repayment capacity. This approach reflects Poddar’s risk background. Understanding the entrepreneur—business longevity, owner capital invested, track record, and long-term viability—matters as much as the numbers on paper.
Making Secured Lending More Digital Without Losing the Human Element
BNF’s second major bet is technology. The company does not aim to turn secured MSME lending into a fully digital product. Property still requires physical inspection. Original documents remain important. Credit officers still need to understand the business. Instead, Poddar wants to eliminate as many manual hand-offs as possible around these physical realities.
Once an application enters the system, documents and information are designed to move digitally. KYC is digital. Banking data integrates into the workflow. Valuation and verification partners feed information into the platform. Where direct integrations are unavailable, documents can be uploaded and processed using OCR and AI-assisted tools. Original property documents remain one of the few unavoidable physical elements.
BNF’s technology thesis is not that software will replace underwriting. It is that technology can reduce paperwork, improve process control, and lower the operating costs of a lending model that still requires people on the ground. Because the company was built in the AI era, it has adopted what Poddar describes as an “AI-native enterprise architecture” from the outset—an approach that becomes especially relevant if the firm expands across hundreds of smaller markets.
Debanshi Basu, Partner at Baring Private Equity India, highlights BNF’s method of leveraging technology within a conventional touch-and-feel underwriting product to drive risk-based decisions while creating a sustainable operating-cost advantage. A traditional branch-heavy model can become expensive as it scales. BNF’s approach combines local underwriting with more digital and centralised processes to support growth without replicating full cost layers at every new location.
Building an NBFC from the Ground Up
BNF has moved quickly since its formation. Poddar left his role as Chief Risk Officer at SBFC Finance in April 2025. The team applied for an RBI NBFC licence the following month. The company received its Certificate of Registration in September 2025 and made its first disbursement in October. By November, it had entered a co-lending arrangement with Godrej Finance Limited.
An angel round followed in February 2026. By March, BNF was operating 11 branches. Looking ahead, the company expects monthly disbursements of around Rs 20 crore during FY27 and assets under management of about Rs 150 crore across 20-25 branches spanning three states and Delhi-NCR.
These remain relatively modest figures in India’s large lending market. The Rs 215 crore equity infusion, however, significantly changes the scale at which BNF can now build.
The Rs 500 Crore Milestone and Beyond
Poddar is conscious of a common trap that fresh capital can create: chasing growth before the underlying economics are ready. The company’s first major scale target is Rs 500 crore in AUM over the next two to three years. He views Rs 1,000 crore as a subsequent milestone and believes BNF could potentially reach a roughly Rs 3,000 crore-plus AUM lender over a five-year horizon.
Reaching those levels will test more than fundraising ability. Affordable MSME lending is a competitive space. Banks and established NBFCs have spent years building distribution, credit models, collections capabilities, and local market knowledge. Expanding deeper into smaller centres adds further complexity—informal cash flows must be assessed accurately, property documentation varies by geography, and collections require local insight. In lending, rapid growth can also mask problems that only become visible once a loan book has had time to season.
Poddar knows these risks well. His career has largely been spent deciding how much risk a financial institution should take. At BNF he must also solve the other side of the equation: how fast a lender should grow. “We will not do growth over risk or governance,” he says.
The harder test is whether BNF can combine the credit discipline of an established lender with the cost structure and operating model of a technology-led startup. That combination will ultimately determine how far beyond India’s top 100 markets the company can truly go.