India is home to more than 63 million micro, small and medium enterprises (MSMEs), 98% of which fall into the “micro” category, meaning they have nine employees or fewer. These tiny organizations are critical to the country’s social and economic development, and many provide essential services within their communities.
Unfortunately, MSME entrepreneurs often face challenges accessing the credit necessary to sustain and grow — an issue that’s become especially dire during the pandemic. A recent survey found just 22% of Indian startups and MSMEs have more than a three-month runway, and 41% have one month or less. Nearly 60% are expecting to scale down, shut down, or sell in the wake of COVID-19.
Avanti Finance is striving to change these outcomes and rebuild livelihoods. The tech-powered non-banking financial institution is offering collateral-free loans to micro-entrepreneurs through its fully digital platform.
I ran a small scrap shop, which completely shut down during the pandemic. A grant from Avanti enabled me to buy two pushcarts and revive my scrap business.Mitlesh
How It Helps
Many of the micro-enterprises in India are unregistered proprietorships, which means they lack access to formal credit. And, without this critical safety net, unexpected crises like the pandemic quickly drain entrepreneurs’ resources and make it difficult to sustain operations. As a result, these grocery stores, eateries, farms, and other critical service providers face temporary or permanent closure.
To help micro-enterprises cover their expenses and continue serving their communities, Avanti offers up to INR 150,000 in working capital for up to 30 months at a highly favorable 11 – 15% per annum interest rate. And because transactions are paperless, cashless, and handled entirely online, micro-entrepreneurs can circumvent many of the challenges presented by the ongoing pandemic.
These loans support entrepreneurs in rebuilding their businesses, regaining their economic and social statuses, and ensuring they can continue to support their families and communities.
So far, thanks to its partnership with Self Employed Women’s Association (SEWA), Samhita, Jai Kisan, and ASA International India Microfinance Limited to identify borrowers, Avanti Finance has helped more than 3,600 entrepreneurs secure credit. Access to these business-saving funds has not only helped sustain entrepreneurs and their employees but also boosts local economic growth and helps achieve greater financial inclusion overall.