BENGALURU — Mumbai-based fintech startup Eduvanz said Thursday it had raised $5 million in its series A funding round, which was led by Sequoia Capital India with participation from existing investor Unitus Ventures.

The latest round takes total funding in the provider of online loans for education to around $6.7 million.

The fresh funding will be utilized to create new credit products, artificial intelligence-based risk management and easier collection tools to support borrowers. It will also use the money to increase the team strength to expand in tier two and three cities in India.

Apart from Eduvanz, there is a clutch of companies in India providing loans online for education, including Credenc, which raised $2.5 million from Omidyar Network and Better Capital last year, as well as Credelia and Shiksha Finance.

Eduvanz received a non-banking financial company license from the Reserve Bank of India in 2017 that allows it to offer financial products and services to customers.

Founded in 2016 by Varun Chopra and Raheel Shah, Eduvanz provides loans in collaboration with educational institutes via its app that lets users apply for a loan, receive updates on the approval process, and can also used for repayments. The company said that students now expect a smoother and faster lending experience and do not want to make multiple visits to banks.

“By combining innovative student-centric loan solutions, robust risk-assessment with cutting edge digital lending technology, Eduvanz is enabling higher enrollment for learners across colleges, universities, certification partners, institutes and schools,” said Chopra, CEO, in a statement.

It has partnered with more than 300 educational institutes to identify students looking for a loan and claims to have helped over 10,000 borrowers. It said it had deployed more than 1.5 billion rupees ($20 million) in loans.

According to the company, most students cannot get loans as banks rely on their credit scores for approval. Moreover, banks and non-banking financial companies are less-likely to approve loans to students who opt for non-traditional courses such as coding, design, data science and scriptwriting.

As of last year, the education loan market in the country had shrunk by 25%. The number of students who received education loans fell to 250,000 from 330,400 students as of March 31, 2015.

“By 2022, we need 700 million skilled workers. However, only 10% of the total workforce receives any formal skill training,” Chopra said.

The company said its decision to approve an education loan went beyond the credit score. Eduvanz uses parameters like social media and education scores, as well as using parents or guardians as guarantors as required.

Its customers range from salaried or self-employed individuals looking to learn new skills or increase their knowledge, college students seeking new certified skills, and parents looking for flexible fee payment solutions for the K12 segment (which covers education from kindergarten to the 12th grade, or around the age of 18) for their children.

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