Channel finance is a structured credit facility provided to a manufacturer’s ecosystem—its dealers, distributors, vendors, and retailers. Instead of blocking working capital in receivables, manufacturers push the burden of financing to lenders, and channel partners get credit support to keep the supply chain moving smoothly.
It bridges the cash flow gap between:
Manufacturer → Distributor → Dealer → Retailer → Customer.
How Channel Finance Works
Partnership with Manufacturer
- 7 Fin ties up with manufacturers (say in FMCG, Auto, Pharma, Electronics).
- Manufacturer introduces its channel partners (dealers/distributors) to 7 Fin.
Credit Sanctioning
- 7 Fin (via banks/NBFCs) evaluates channel partner profile (sales history, manufacturer backing, creditworthiness).
- Facility sanctioned—often revolving credit with limits aligned to sales cycle.
Transaction Flow
- Dealer buys goods from manufacturer using credit line arranged by 7 Fin.
- Manufacturer receives upfront payment.
- Dealer repays 7 Fin (bank/NBFC) as per agreed terms (30-90 days).
Benefits to Stakeholders
For Manufacturers
- Cash flow certainty → Immediate payment from 7 Fin partner banks/NBFCs.
- Sales growth → Dealers stock more because of liquidity.
- Lower credit risk → Credit responsibility shifts to lenders.
For Dealers/Distributors
- Working capital support → No need to pay upfront for stock.
- Flexibility → Repayment aligned with sales revenue.
- Growth enabler → Can stock higher volumes, capture seasonal demand.
For Lenders (Banks/NBFCs)
- Risk mitigation → Manufacturer’s backing + transaction visibility.
- New client base → Dealers & distributors become borrowers.
- Sticky relationships → Tied up with entire supply chain.
Benefits to 7 Fin
As an aggregator & fintech, 7 Fin can create value across the ecosystem:
Business Expansion & Partnerships
- Tie-ups with large manufacturers (Auto, FMCG, Pharma) → opens doors to hundreds of dealers.
- 7 Fin becomes the preferred channel finance arranger.
Recurring Revenue Model
- Earn commission/fees from both banks/NBFCs and manufacturers for facilitating credit lines.
- Continuous flow of deals since channel finance is a revolving facility (repeat usage).
Cross-Selling Opportunities
Dealers taking channel finance can be offered:
- Business loans
- Working capital loans
- Insurance (credit protection, inventory insurance)
- Investment advisory (extra profits parked smartly).
Low Credit Risk for 7 Fin
- Credit risk sits with banks/NBFCs, not directly on 7 Fin.
- 7 Fin earns margins through facilitation & aggregation, not exposure.
Brand Positioning
- 7 Fin – Enabling Growth Beyond Capital.
- By helping manufacturers & their entire network, 7 Fin positions itself as a growth partner rather than just a loan arranger.