The AI Underwriting Engine Behind Recur Club’s ₹500 Cr Festive D2C Capital Push

The festive season puts upfront operational pressures on startups and small and medium enterprises (SMEs). Businesses need upfront capital to purchase larger volumes of goods, raw materials, or finished stock before peak demand hits. 

As per the Confederation of All India Traders, the total festive trade in 2025 was at ₹6.05 lakh crore—of which 85% moved through traditional retail.

To bridge the financing gap, Recur Club, an AI-native debt marketplace for startups and SMEs, recently announced a ₹500 crore financing initiative for direct-to-consumer (D2C) brands, targeting their working capital and expansion needs during the festive season.

The Delhi-based startup saw an increased demand for debt financing across online marketplaces, quick-commerce platforms, and physical retail. Data from more than 5,000 D2C companies on its platform shows that demand for growth capital typically rises by around 35% during the festive quarter.

Quick-commerce businesses recorded the highest requirement for growth capital between July and September 2026, followed by retail and consumer goods, fast-moving consumer goods (FMCG), and consumer durables.

With an average ticket size of approximately ₹3 crore, the company expects the financing initiative to support around 150–170 D2C brands, depending on their individual capital requirements. Co-founder Eklavya Gupta says the company plans to deploy the capital over the next 12–15 months.

“We have been financing D2C brands for the past three to four years and intend to continue growing this business. There is a seasonal surge in demand, which made this a suitable time to launch the fund,” Gupta tells AIM.

AI-Led Underwriting and Credit Risk

Recur Club uses AI across document collection, due diligence, underwriting and lender matching. Its platform collects financial statements, legal documents, compliance records, goods and services tax (GST) data and bank statements, then reconciles the information to assess a borrower’s financial position.

The company uses existing AI models and develops small language models trained on datasets for due diligence, underwriting, and credit analysis.

“Preparing and evaluating balance sheets, profit-and-loss statements and cash flows could take an analyst two days; our model can do it in around two minutes,” Gupta claims.

The platform covers financial, legal, and compliance checks as well as background and management assessments. The system can also identify discrepancies across financial records and test scenarios, such as how a debtor default could affect a borrower’s financial position.

AI handles around 70–80% of the work, according to Gupta. Human involvement remains part of the process, including conversations with business owners, meetings, and assessments that require judgement.

Recur Club tracks deal-to-disbursement turnaround time and non-performing asset levels to assess its underwriting process. Gupta notes the platform’s default rate had stabilised below 0.5%, attributing the performance partly to its AI credit analyst. 

Recur Club plans to continue refining its models using feedback from completed transactions and lenders’ underwriting policies to improve borrower-lender matching and reduce costs.

Financing Inventory and Expansion

The initiative will support inventory purchases, receivables management, new sales channels, and expansion into additional cities. Recur Club has identified inventory procurement and store or capacity expansion as two key financing requirements among the D2C brands it serves.

Under its inventory financing arrangement, inventory is procured on behalf of a brand, which then sells the products through its existing channels and repays the financing in installments. Recur Club says this structure is designed to help businesses manage working capital without adding the associated inventory financing to their balance sheets, subject to the terms of the arrangement.

For store and capacity expansion, the five-year-old startup facilitates financing for equipment and fit-outs for new retail outlets. Brands make monthly payments until the financing is repaid, spreading expansion costs over time rather than bearing the entire expenditure upfront.

Gupta said transactions typically range from ₹5 crore to ₹25 crore per company, with interest rates of around 15–17%. The applicable rate depends on the financing product and commercial arrangement.

Credit risk also varies by structure. “It depends on the product and the commercial arrangement. In some structures, we take on part of the risk; in others, we do not,” the founder notes.

Inventory financing carries risks if brands misjudge demand. “One challenge is forecasting inventory and sales. If expected demand does not materialise, a company can be left with inventory that is difficult to liquidate,” he adds.

Recur Club said it facilitated approximately ₹275 crore for more than 100 D2C brands in the current financial year, taking its cumulative capital facilitated for the sector to ₹1,200 crore.

Broader Debt Financing

Recur Club says that it has facilitated more than ₹3,000 crore in capital across over 2,000 companies, working with more than 100 lending partners. The platform connects businesses with banks, non-banking financial companies (NBFCs), venture debt funds, and other institutional lenders. 

The company initially focused on recurring-revenue financing for startups. It has since expanded into a multi-product debt platform serving startups, SMEs, and mid-market companies.

“We initially focused on recurring-revenue financing for startups. Over time, we have evolved into a multi-debt, multi-product platform that offers several options in one place and aims to meet a company’s debt-capital needs. Startup debt financing remains one of our products, but it is now one of around 10 products we offer,” Gupta said.

Gupta said transaction fees typically range from 1–3%, depending on the transaction and product. The company earns fees from businesses and investors, including for services such as credit monitoring.