Expanding opportunities for nano entrepreneurs in India

“Nano enterprises have a significant role to play in the growth of our economy, from generating employment opportunities to contributing a significant share to our GDP. Nano entrepreneurs typically run small retail or kirana shops, are micro wholesalers, or earn a livelihood as street vendors. They have an annual turnover between INR 1 million and 10 million and most of them are informal, with limited to zero access to formal financial services to sustain and grow their businesses.?

By enabling access to formal credit for this segment of the population with customized solutions, we enable not just our nano enterprises to thrive and grow but also our economy.”

– Geeta Goel , Managing Director, Michael & Susan Dell Foundation India

PARTNER STORIES

Kinara Capital

Kinara Capital aids nano entrepreneurs by providing fast and flexible loans without collateral. Its approach combines high-tech fintech solutions with a human touch to serve nano enterprises. By offering a blend of digital and physical support in a “phygital” model, lenders can serve a larger number of nano entrepreneurs faster while potentially reducing the cost of servicing small-ticket loans.

As of December 2022, they have supported over 50,000 nano enterprises with an active loan portfolio of INR 2,000 crores.

This model supports the economy in three key ways:?

1. Increased Business Growth – Access to credit helps mitigate financial vulnerability and enables nano entrepreneurs to nurture their businesses, directly contributing to GDP growth.
2. New Job Creation – ncreased stability and growth of businesses also helps create employment opportunities and strengthen livelihoods in local areas, creating a supply chain for high-growth nano entrepreneurs.?
3. Quality of Life –? Increasing the business income of nano entrepreneurs enables increased investment in their families’ education. This is particularly true of women who are likely to spend 90% of their earned income on the nutrition, health and educational needs of their families, leading to broad improvements at the community level.

Samhita

To provide support to the 122 million people affected by the pandemic, Samhita along with Collective Good Foundation launched a blended finance program called REVIVE. REVIVE provides zero-interest returnable grants and support, giving preference to self-employed women and youth. In addition, the program is able to support them through multiple other interventions such as direct benefit grants, access to social security, and pay-for-performance grants.

The program’s financial assistance comes in the form of? Returnable Grants (RGs). Once RGs are repaid, they are circulated within the system in the interest of the next beneficiary. Beyond credit, RGs can become a broader instrument for financial inclusion and economic resilience.

RGs as a tool have supported financial recovery and led to an increase in repayment rates among nano entrepreneurs while helping to provide them more stability for the future. Various cohorts have seen repayment rates between 75-100% with an average repayment rate of more than 80%. The platform has seen repayments coming in during the toughest of times, indicating the strong desire in the community to pay it forward.?

IMPACT STORIES

Kinara Capital

“My wife and I started our company in 1999. The pandemic halted our business, but in January 2021, the loan disbursed to us through Kinara Capital changed our lives. We were able to revive our work, return monthly turnovers to pre-pandemic levels, and eventually, even grow our customer base.”

Learn more about our partner Kinara Capital's efforts in helping small businesses grow.

Samhita

“It was always my dream to own a beauty parlor, but the second wave of the pandemic shut down my business. REVIVE’s support has allowed me to open a second parlor now but has also given me courage. It has helped me carve out a new life for me and my children.”

– Fairoza Bano, Beauty Parlour Owner

Learn more about Samhita's blended finance organization REVIVE to support self-employed women and youth.

THE WAY FORWARD

Small businesses are vital to the economy, including job generation, innovation, and absorbing economic shocks. This is certainly true in India, where 98% of micro, small, and medium enterprises generate over 30% of the GDP. As micro and small firms grow and the economy matures, nano entrepreneurs will have access to new market opportunities. Financial institutions have a significant role to play in ensuring that nano entrepreneurs have access to the capital they need to capitalize on these opportunities, to the benefit of their families, communities, and all of India.