The Fitness Coach Conundrum - Can Informal Incomes Be Trusted?

BEYOND RATIOS SERIES - EPISODE 2

Introduction

Priya, a certified fitness coach based in Coimbatore, has carved a niche for herself online. From Zoom-based workouts to personalized WhatsApp fitness coaching, her client base spans metros and small towns. Her income? Steady but scattered. Her challenge? Getting a working capital loan to upgrade her home gym and invest in marketing tools.

But when she approached her bank, she was met with polite skepticism. No Form 16. No GST registration. No traditional balance sheet. Just her bank passbook filled with GPay and PhonePe credits.

"Frustrated, Priya held up her GPay dashboard to the relationship manager as proof of income. But it wasn’t enough."

So what’s stopping banks from trusting these new-age entrepreneurs? Let’s unpack.

1. Understanding the Credit Need

Priya's needs are simple:

• INR 3 lakhs as working capital to purchase home gym equipment and lighting.

• INR 50,000 for paid Instagram and YouTube promotions.

• INR 2 lakhs for creating an app to manage client routines and payments.

  
  

She doesn’t want a long-term loan. She wants flexibility. And above all, she wants speed.

2. Why Traditional Banks Struggle

Despite the wave of financial inclusion, formal lenders struggle with such profiles due to:

• Documentation Mismatch: No ITRs, no Tally-based accounting, no GST. Only QR/UPI trails.

• Perceived Volatility: No binding contracts with clients. Income is episodic.

• Inadequate Security: No business collateral.

• Category Misfit: Her profile doesn’t map neatly into any standard industry segment.

Result: Banks decline, or offer personal loans at higher rates and lower limits.

3. Validating Informal Incomes - What Are We Asking?

Can the credit team really take comfort in UPI receipts?

• Are these real customers or related parties?

• Is the income seasonal or repeatable?

• How do we know she isn’t just recycling money through mule accounts?

  
  

These are real risks. But the answer lies not in rejection, but triangulation.

4. Science of Triangulation and Behavioral Signals

Data Source	Signal Inferred
UPI Trail	Volume, frequency, diversity of payers
Social Media Footprint	Engagement quality, client testimonials
Bank Statements	Matching income vs expenses patterns
Device + Geo Tags	Consistency of operations from declared area
Google Reviews/WA Chats	Existence and satisfaction of clientele

These signals don’t prove income like a balance sheet. But collectively, they provide behavioral assurance.

5. Fraud Risks Are Real. But Not Unmanageable.

Fraud Type	Description
Synthetic Identity	Fake trainer persona with dummy clients
Income Pumping	Temporary inflow from friends to simulate income
Fronting for Others	Business being used as cover for someone else
Fake Engagement	Bought followers/testimonials

Lenders can deploy tools like:

• Account Aggregator data cross-checks

• Video KYC with liveness detection

• Digital signature patterning

• Repayment-triggered top-ups to limit exposure

  
  

6. Why It Matters

Dismissing Priya means sidelining a generation of digital entrepreneurs.

The way forward is not binary approvals but graded exposure:

• Start small

• Monitor closely

• Scale with performance

  
  

Banks must evolve their models to lend based on repayability, not just documented profitability.

7. Who’s Seizing the Opportunity?

While traditional lenders hesitate, a new breed of opportunists is filling the gap:

🟡 Neo-lenders & Digital NBFCs: Platforms like LendingKart, Indifi, and InCred underwrite using UPI patterns, bank analytics, and AA data.

🟢 Embedded Finance Providers: Meesho, Udaan, RazorpayX lend based on transaction velocity and platform loyalty.

🔵 BNPL & Microloan Apps: ZestMoney, LazyPay, and Slice onboard thin-file borrowers and offer bite-sized loans.

🔴 Escrow-Based Platforms: Fintechs enabling fund-based delivery, thereby ensuring revenue flow visibility.

They are redefining what it means to be ‘bankable.’

Conclusion

Credit assessment in the digital economy needs to shift from binary checkbox models to trust-but-verify frameworks. For entrepreneurs like Priya, finance is not just capital — it's confidence.

Disclaimer:

The case study presented in this article is illustrative in nature. Any resemblance to actual persons or businesses is purely coincidental. The views expressed are intended for educational and awareness purposes only and do not constitute financial advice or a lending recommendation. Readers are encouraged to apply appropriate due diligence and consult relevant professionals before making lending or borrowing decisions.